Rising Tide Lifts All Banks

NEW YORK: So what if the national savings rate is negative? Even as the stock market has replaced the savings account as America's low-risk investment of choice, banks aren't suffering a bit. Because as long as the money's flowing somewhere, they'll get a piece -- and that makes bank stocks pretty nifty investments themselves. Banking giants Citigroup, BankAmerica Corp and the Bank of New York Co. all reported stronger-than-expected first-quarter earnings Monday, and with Chase Manhattan, Bank One and Mellon Bank expected to follow suit when they announce on Tuesday, it's apparent that the consumer-spending-driven boom that brought us Dow 10,000 this spring has been just as good for the institutions that used to hang on to all that money for us.

Area one: stock. Conglomerates such as Citigroup now handle customers' trading needs as well as underwriting IPOs and mergers; with action on both fronts at historic highs, the banks' cut is plenty juicy. Area two: credit cards. People are putting their extra money in the can't-miss markets and funneling part of their pay into their 401(k)s. For purchasing, cash flow and sometimes actually borrowing to invest, out comes the plastic. Citigroup and Bank One have both expanded their credit-card operations lately. Other businesses, meanwhile, are looking to expand while the gettin's good; banks are where they borrow the money. The banks get their money from the interest and transaction fees -- not from under your mattress anymore.