Has the Financial Industry's Heyday Come and Gone?

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Has the Financial Industry's Heyday Come and Gone?
By JUSTIN LAHART
April 28, 2008; Page A2

For the past three decades, finance has claimed a growing share of the U.S. stock market, profits and the overall economy.

But the role of finance -- the businesses of borrowing, lending, investing and all the middlemen in between -- may be ebbing, a shift that would redefine the U.S. economy. "The role of finance in the economy is going to come down significantly in the coming years," says Carlos Asilis, chief investment officer at Glovista Investments, a New Jersey money manager. "From a societal standpoint, we got carried away with finance."

The trend already has hurt companies beyond banks and Wall Street firms. General Electric Co.'s first-quarter profits at its financial-services businesses were 21% lower than a year earlier. Retailer Target Corp., which got 13% of its before-tax profit last year from credit cards, last month wrote off $55.5 million in credit-card loans, 8.1% of its total portfolio at an annualized rate.

"I think you're seeing a clear inflection point," says Tom Gallagher, an ISI Group analyst. "Whether it's financials as a share of the stock market or financials as a share of GDP, we've peaked..cont'd

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1. Our heyday as a nation has come and gone

the best someone can trade in now is fresh greens and herbs.