Huge Profits Prove Again that Dodd Frank Isn’t Hurting Banks, But Banks’ Push for Deregulation Still Intensifies
While not setting a new mark for the most profitable quarter ever, as the banks did in the first quarter of 2018, posting $56 billion in profits, the second quarter numbers just released by the banks show that the first quarter was no fluke. They continue to post astronomical profits while continuing to push for deregulation.
With the exception of Wells Fargo, which for obvious reasons (continuing fallout over the fraudulent account scandal and the sanctions imposed by the Fed) did not perform as well, all of the big banks showed continued growth in the second quarter in profits and revenues, with Bank of America reporting $6.8 billion in profits for the quarter for a 33% increase. Citigroup reported $4.5 billion in profits (16% increase), JPMorgan Chase $8.3 billion (19% increase), Goldman Sachs had $2.6 billion in profits (37% increase), and Morgan Stanley $2.4 billion in profits (39% increase). As Paul Volcker said, if this shows that the rules are killing the banks, they should be asking for more rules!
As had been reported before the quarter closed, bank loan activity also increased. As Better Markets has discussed in the past, this again shows that Dodd-Frank has not impaired banks’ ability to lend and that banks continue to re-balance their activities away from trading to lending and other activities that support the real economy, which creates jobs and economic growth.
However, as overwhelming proof continues to come out that supports financial regulation, Congress and the federal banking agencies remain all too eager to remove many of the safeguards put in place after the financial crisis. If they are successful, there is little doubt banks will shift their activities back to the riskier behavior we all saw in the lead up to the crisis. A move like that will only benefit Wall Street bankers looking for a bigger bonus, not the Main Street consumer who’s looking for a loan to start a small business or purchase a home.
