Big profits and reforming the reforms

After two and half years of clawing itself back from the brink, Citigroup said that earnings rose 24 percent amid decent investment banking results and lower consumer loan losses.Citigroup announced a profit of $3.3 billion, or $1.09 a share, beating analyst consensus estimates of 96 cents per share. The bank had reported a $2.7 billion profit, or 90 cents a share, in the second quarter of last year.

And more good news:

Wall Street has spared little expense, spending nearly $52 million to woo Washington in the first three months of the year, up 10 percent from the previous quarter, according to the Center for Responsive Politics. Mr. Bartlett’s organization, the deep-pocketed Financial Services Roundtable, itself spent $2.5 million in that period, more than any organization focused primarily on the Dodd-Frank regulatory overhaul law, including Goldman Sachs and JPMorgan Chase.

Mr. Bartlett is unapologetic. As in the case of the meeting with top Senate staff members, Mr. Bartlett says he is willing to be aggressive to protect the industry’s profits from overly harsh rules. By his reckoning, Wall Street is not trying to dismantle the financial regulation enacted under the Dodd-Frank Act a year ago this month. Rather, as he explained with his Texas twang, “We are trying to reform the reform.”

That is not how critics of Wall Street see it. After being saved by government largesse, they say, big banks then moved to thwart reforms aimed at preventing future meltdowns caused by excessive risk-taking. Wall Street “should have learned that these practices threatened the global economy,” said Barbara Roper, director of investor protection for the Consumer Federation of America, an advocacy group. But “they’re right back to spouting the same line.”

Ted Kaufman, the former Democratic senator from Delaware who played a role in drafting Dodd-Frank, lamented Wall Street’s heavy spending in Washington, saying, “this is the most uneven battle since Little Big Horn.”

While Wall Street has lost a few skirmishes, the industry has gotten much of what it wanted. In late June, the Federal Reserve softened the cuts to debit-card fees, saving the industry billions of dollars a year. Mr. Bartlett’s group and other lobbying firms also pressed regulators to put off new derivatives regulations for up to six months, after the Treasury Department moved to excuse some of the complex securities from oversight altogether.

The Commodity Futures Trading Commission, according to one of its officials, is even reconsidering plans to curb banks’ control over derivatives, once seen as a cornerstone of Dodd-Frank.

So, does anyone have any real hope that these people won’t reform “tax reform” too?

This is why I think the idea of “closing loopholes” and “ending tax expenditures” in exchange for lowering rates is daft. The lower rates will stick all right. I’m skeptical about the rest.

h/t to TP

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