Four of the largest U.S. banks--Goldman Sachs, Citigroup, JP Morgan, and Bank of America--have all accomplished something that would be impressive in any year, but is especially so in today's economy. All four report that they made money during every single one of the 61 days of trading in the first quarter of 2010. To underscore the significance of the event, this is Goldman Sachs' first perfect quarter since its 1869 founding. How did this happen?

  • Banks 'Played Matchmaker' Well  There might not be much of a secret recipe, according the New York Times' Eric Dash. "Risk management experts said the four banks, as well as other Wall Street players, reaped big rewards without necessarily placing big bets that stocks or bonds would go up or down. Instead, they mostly played matchmaker, profiting from the difference between the prices at which clients were willing to buy and sell. Banks said that customer order flows were particularly strong during the period." Dash paints the episode as largely a fluke.
  • 'Ultralow' Interest Rate  NPR's Jacob Goldstein cites the "ultralow interest rates set by the Fed" to explain it. "The near-zero short-term interest rate set by the Federal Reserve means that banks can borrow money essentially for free. When you can borrow for free, you can even lend money to the government and make a profit. Ten-year Treasury bonds paid an average interest rate of 3.7 percent last quarter."
  • Banks' 'Responsibilities to Clients'  The Big Money's Kelly Faircloth suggests, "The impressive results are likely to stir up the debate over proprietary trading and banks' responsibilities to their clients." She adds, "The gains weren’t due to big bets. Instead, banks profited from matching clients to stocks at the right price. This quarter, they say, the flow of orders just happened to be especially steady."
  • Big Banks Have a Big Lead in Trading  The New York Times' Eric Dash writes, "Their showing, disclosed in quarterly financial filings, underscored the outsize — and controversial — role that trading has assumed at major financial institutions. It also drives home the widening lead that a handful of big banks are enjoying over lesser rivals on post-bailout Wall Street."
  • Proves Futility of 'Playing' the Stock Market  Reuters' Felix Salmon explains, "Active investors, in aggregate, never outperform the stock market. Firstly, volatility is good for traders, not investors: just check out the spectacular trading results at the money-center banks last quarter. Those profits come from trading desks which are structurally flat(ish), rather than from investors who are structurally long. The advantage that investors have over traders is that they have time and patience, but if stocks in general are going nowhere over the long term, then that advantage dissipates, and playing the stock market becomes a zero-sum game in which the big banks are winning and therefore everybody else is losing."
  • 'Rigged' Game  Liberal blogger John Cole is highly suspicious. "They didn’t play a perfect game. They played a rigged game. Someone want to explain the role of high frequency trading and the other tools at their disposal to the NY Times?"