It is earnings reporting season, and today’s reports feature the banks.

The Orderly Liquidation Authority created by the Dodd-Frank Act retains many of the flaws of ad-hoc pre-crisis practices and does little to improve creditors’ incentives to monitor risk-taking.

Several dampening factors – asset-quality troubles, mortgage liabilities and tighter regulations – will decide the fate of the U.S. banks in the quarters ahead.

Overall, optimism prevailed with several steps taken by banks to drive growth and resolve legacy issues. Most of the banking stocks showed positive price movement. Issues pertaining to pre-crisis business conduct continue to trouble major global banks.

China, believe it or not, is in more of a credit bubble than the United States. The United States has got lots and lots of problems. But China is actually worse - probably because they haven't been through this as many times as we have.

September E-mini S&Ps (ESU14 -0.35%) this morning are down -0.36% and European stocks are down -0.41% ahead of this morning's U.S. Aug non-farm payrolls.