JPMorgan's earnings have set a tough tone for other banks as the third-quarter earnings reporting season continues.

It's clear that business has slowed precipitously this year, as reflected by JPMorgan's severe decline in revenue from the second quarter to the third quarter. While debit valuation adjustments (net of credit valuations adjustments) will help banks this quarter, people are looking past that to what appears to be a secular trend toward lower revenues.

The legal liability that seems to be mounting--JPMorgan hiked legal reserves by $1 billion--certainly is not helping. It could be more severe in the case of Bank of America. All this, plus the Bank of America fee hike, has prompted an op-ed in the New York Times to excoriate the bank for a host of practices, arguing that banks are "habituated to gouging their customers" among other things.

"The banks also have gotten themselves into a legal mess for which they have no one to blame but themselves," it writes.

It's unclear what the answer is short-term. Obviously, the economy needs to start growing again, but the likes of Bank of America do not appear to be well positioned to ride a growth wave. The legacy problems are just too much. So perhaps banks are fairly valued at steep discounts to their book values. The op-ed concludes with a plea for transparency, which is always good. The rise of Dodd Frank in many ways aims at just that.

But that is not the complete answer to the bank's woes. After the mortgage-backed crisis erupted and after interchange fees have been dampened, we're still asking: What's next? No one seems to know, other than to hike fees where possible. The industry as of right now isn't innovating at the wholesale or retail level, developing new services that can generate new revenues. And that's what's really sad. One might argue that the bank needs to return to the simple business of making loans. That's hard to argue with, to be sure.

For more:
- here's the op-ed

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