Bank Hiring Offers Glimmer of Hope

NEW YORK ( TheStreet) -- Banks are hiring tens of thousands of workers for their mortgage and capital markets operations, a glimmer of hope in the decidedly bleak labor market.

Regulators have said time and again that tremendous taxpayer support of the banking industry was warranted only because the banks that led the U.S. into the crisis will lead the country out again. If one can read the tea leaves by looking at profit statements and job listings at the country's largest banks, other workers should stop worrying about layoffs and start looking forward to raises.

Bank of America ( BAC), Wells Fargo ( WFC) and JPMorgan Chase ( JPM) have earned $19 billion in shareholder profits so far this year and are hiring new workers to sustain that momentum. Goldman Sachs ( GS) alone has earned $7.4 billion, and is doing the same, as is Citigroup ( C), whose profit statement is bogged down with too many special items to be comparable.

Those firms, and others, like American International Group ( AIG), would like to offer lucrative pay packages to lure or retain the best traders, managers and senior executives. They are currently haggling with the government's pay czar or preparing PR offensives to justify such moves.

For mortgage modifications alone, the top four banks -- Bank of America, JPMorgan Chase, Wells Fargo and Citigroup -- have hired 17,000 new employees, according to a report in the Wall Street Journal on Thursday. BofA, JPMorgan, Citigroup and Goldman Sachs are looking to hire another 10,000 workers, according to Forbes, mainly for their trading and investment advisory businesses as the capital markets have improved.

Those tallies don't include smaller financial shops around the country that have begun to hire once again. There are also new start-ups that seized on big banks' weaknesses, sensing the industry wasn't prepared to handle huge demand for mortgage refinancings. And more are in the pipeline.

According to a Treasury Department report last week, only one out of every five mortgage holders eligible for a government-subsidized modification has begun the process. Roughly 2.6 million more are eligible; offers have been extender to 919,965 of them.

There are hundreds of thousands of ineligible homeowners whose mortgages are being worked out, too. Modification data from Wells Fargo -- which has been a leader in the refi boom and touches about one of every six U.S. home loans -- speaks to that fact. The bank has modified 1.5 million home loans, just 403,044 of which fit into the Treasury's program.

Broadly speaking, Labor Department data show that the financial sector is still cutting jobs, and has lost a net 529,000 jobs since the beginning of last year. However, net job losses and the annual rate of change have declined sharply in recent months. It appears that those losses may have peaked in August -- or at least that the hirings had begun to counteract the firings.

Of course, banks hiring for bond traders and loan modifiers doesn't mean that every mom-and-pop shop across the country will put up "help wanted" signs. The broad unemployment rate has soared past 10%, or is at 17.5%, depending on who is factored in. There isn't a consensus among economists that it has topped out quite yet, since the job market is a lagging indicator of economic recovery.

However, it's undeniable that the financial industry -- the one with all the toxic assets at the crux of the recession that received billions in direct capital infusions, and trillions in government support -- is finally showing signs of life. For the rest of the economy, it's a fact tinged with irony and hope for the months ahead.

-- Written by Lauren Tara LaCapra in New York

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