Testifying before the Senate Finance Committee last week, Treasury Secretary Kennedy defended the recent rise of the prime interest rate as a normal and necessary response to inflation. Said he: "We are paying for past sins."
Maybe so, but those sins are yielding notably handsome wages for banks. Reports last week of banks' first-half earnings emphasize that, whatever else they accomplish, high interest rates produce high profits. Compared with the first half of 1968, net operating earnings at Manhattan's Manufacturers Hanover Corp., parent of the fourth biggest bank in the nation, rose 21% to $40 million.
Operating earnings climbed 13% at...
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