Financial services. (cover story)

This article focuses on the impact of increases in interest rates by the U.S. Federal Reserve Board on various sectors of the financial services industry. With ultralow short rates, the Federal Reserve governors saved the banking system and fueled a bull market in stocks and bonds; brokerages and mutual fund houses coined money. Smart bankers have already been doing that. They have been slow to raise the rates they pay depositors, much quicker to raise their prime lending rates. As the bull stock and bond markets stumbled, brokerage industry profits dropped by nearly 80%, to $1.8 billion.