If US banks are coining it in now, what's going to happen when the economy really recovers?

The first results come in.

If you look hard enough, you can just about find evidence of the US economy moving in the right direction.

Figures released yesterday highlighted that US banks re-possessed 17 per cent fewer homes in 2012 than in 2011. Meantime, a report from the US Commerce Department showed that housing stats rose by 12.1 per cent in December year-on-year to hit their highest monthly level since June 2008.

The slow rebound in US house prices provides further evidence of possible green shoots of recovery. The huge tide of negative equity has been a disaster for the US economy. Almost 11m US homes, or about 22 per cent of all residential properties with a mortgage were in negative equity at the end of the third quarter. The recent slight rise in US house prices meant that around 100,000 mortgage customers slipped back into positive equity in the quarter running up to Christmas with scope for a further 1.8m US homeowners estimated to have some equity in their homes during 2012.

From the evidence of the first banks to post annual results as the reporting season kicked off this week, US banks are already coining it in.

The largest US bank, JPMorgan Chase reported its highest ever annual profit after tax, $21.3bn, up 12 per cent for the year.

The country’s fourth-largest lender, Wells Fargo also hit a record high net profit: $18.9bn, up 19 per cent from 2011.

Hot on its heels, the fourth-largest lender, US Bank, posted a record full year profit of $5.6bn, up 16 per cent year-on-year.

Stand by, perhaps in a year or two, for commentators and politicians to express moral indignation at excessive bank profits if and when the US economy really does start to recover.

US unemployment remains stubbornly high at almost 8 per cent, but just a 1 per cent fall will feed through into a further sharp rise in US bank profits. At JPMorgan, 2012 earnings would have been even higher but for a $6bn trading loss at the bank last year.

Chase "punished" CEO Jamie Dimon by slashing his 2012 pay package to a mere $11.5m from $23.1m the previous year. He should however be able to jog along on his reduced pay package. At the last count, he owned bank shares worth $263m.

Sky's the limit. Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

Photo: Getty
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How a small tax rise exposed the SNP's anti-austerity talk for just that

The SNP refuse to use their extra powers to lessen austerity, says Kezia Dugdale.

"We will demand an alternative to slash and burn austerity."

With those few words, Nicola Sturgeon sought to reassure the people of England, Wales and Northern Ireland last year that the SNP were a party opposed to public spending cuts. We all remember the general election TV debates, where the First Minister built her celebrity as the leader of the anti-austerity cause.

Last week, though, she was found out. When faced with the choice between using the powers of the Scottish Parliament to invest in the future or imposing cuts to our schools, Nicola Sturgeon chose cuts. Incredible as it sounds the SNP stood shoulder to shoulder with the Tories to vote for hundreds of millions of pounds worth of cuts to schools and other vital public services, rather than asking people to pay a little bit more to invest. That's not the choice of an anti-austerity pin-up. It's a sell-out.

People living outside of Scotland may not be fully aware of the significant shift that has taken place in politics north of the border in the last week. The days of grievance and blaming someone else for decisions made in Scotland appear to be coming to an end.

The SNP's budget is currently making its way through the Scottish Parliament. It will impose hundreds of millions of pounds of cuts to local public services - including our schools. We don't know what cuts the SNP are planning for future years because they are only presenting a one year budget to get them through the election, but we know from the experts that the biggest cuts are likely to come in 2017/18 and 2018/19. For unprotected budgets like education that could mean cuts of 16 per cent.

It doesn't have to be this way, though. The Scottish Parliament has the power to stop these cuts, if only we have the political will to act. Last week I did just that.

I set out a plan, using the new powers we have today, to set a Scottish rate of income tax 1p higher than that set by George Osborne. This would raise an extra half a billion pounds, giving us the chance to stop the cuts to education and other services. Labour would protect education funding in real terms over the next five years in Scotland. Faced with the choice of asking people to pay a little bit more to invest or carrying on with the SNP's cuts, the choice was pretty simple for me - I won't support cuts to our nation’s future prosperity.

Being told by commentators across the political spectrum that my plan is bold should normally set alarm bells ringing. Bold is usually code for saying something unpopular. In reality, it's pretty simple - how can I say I am against cuts but refuse to use the powers we have to stop them?

Experts - including Professors David Bell and David Eiser of the University of Stirling; the Resolution Foundation; and IPPR Scotland - have said our plan is fair because the wealthiest few would pay the most. Trade unions have backed our proposal, because they recognise the damage hundreds of millions of pounds of cuts will do to our schools and the jobs it will cost.

Council leaders have said our plan to pay £100 cashback to low income taxpayers - including pensioners - to ensure they benefit from this plan is workable.

The silliest of all the SNP's objections is that they won't back our plan because the poorest shouldn't have to pay the price of Tory austerity. The idea that imposing hundreds of millions of pounds of spending cuts on our schools and public services won't make the poorest pay is risible. It's not just the poorest who will lose out from cuts to education. Every single family and business in Scotland would benefit from having a world class education system that gives our young the skills they need to make their way in the world.

The next time we hear Nicola Sturgeon talk up her anti-austerity credentials, people should remember how she did nothing when she had the chance to end austerity. Until now it may have been acceptable to say you are opposed to spending cuts but doing nothing to stop them. Those days are rapidly coming to a close. It makes for the most important, and most interesting, election we’ve had in Scotland.

Kezia Dugdale is leader of Scottish Labour.