Ready, set, go!
And they’re off!
After sucking wind due to hard-hitting Washington regulators, big banks like JPMorgan Chase and Bank of America are racing to regain some of the ground they lost over the last three years, fueled by a Republican-run House that is inclined to grant them more breathing room.
“The shift in the political power in Washington dilutes the impact of those who were most virulent that the banking industry had to be shackled,” said bank analyst Dick Bove. “[The change of power] allows the regulators more freedom in establishing rules that the banks can live with.”
While few believe the bank-bashing days are behind them, the industry is hopeful that many of the financial reforms imposed by the Dodd-Frank act will be amended or scrapped.
Floyd Stoner, an executive vice president at the American Bankers Association, told The Post that there are signs that aspects of bank reform will be redrafted.
“There are elements of the [Dodd-Frank] bill that are simply too prescriptive and too intrusive,” Stoner said.
Stoner said lobbyists are pressing hard to get some hot-button aspects of the bill, such as changes to so-called interchange fees, repealed outright. JPMorgan CEO Jamie Dimon has been one of the more vocal critics of moves to cut those fees, which banks charge for debit-card transactions.
Critics argue that changes made to interchange fees under Dodd-Frank benefit big-box stores like Wal-Mart, Target and Best Buy. To compensate, the banks argue they’ll have to pass on the billions of dollars in fees to average consumers.
Stoner said banks are optimistic that that rule could be amended or repealed.
Many of the more contentious elements of financial reform might also come under fire, including rules that restrict the use of hard-to-parse derivatives.
Legislators are already attacking the controversial Volcker Rule, named after former Federal Reserve chairman Paul Volcker, which prohibits banks from using their own capital to make investments.
So far, Alabama Republican Spencer Bachus — the frontrunner to take over the House Financial Services Committee from Barney Frank (D-Mass.) — is leading the charge against the measure, which has forced banks such as Goldman Sachs to retool their trading operations.
The Federal Reserve is also granting banks more leeway and has signaled that it will loosen capital requirements for healthy institutions, allowing them to boost dividends to shareholders.
News that the Fed is set to ease dividend restrictions pumped up financial stocks for a second day. Citigroup shares closed up 3.7 percent to $4.49, while Bank of America climbed 2 percent to $12.36. JPMorgan shares rose 2.9 percent to $40.94.
