Business

Banks' profits hit another record

Industry reports $62 in profits in its third quarter

Los Angeles Times/TNS

“Make no mistake, come January ... the days of this committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end,” says Rep. Maxine Waters, expected to lead the U.S. House Financial Services Committee.
Los Angeles Times/TNS “Make no mistake, come January ... the days of this committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end,” says Rep. Maxine Waters, expected to lead the U.S. House Financial Services Committee.

The U.S. banking industry’s profits reached a record $62 billion during the third quarter, fueled in large part by a corporate tax cut, according to government data released Tuesday.

Without the tax cut passed by Congress last year, the industry’s profits would have been $54.6 billion, according to the Federal Deposit Insurance Corp., the banking regulator.

The 29 percent increase in quarterly profits is just the latest indication that, a decade after a global financial crisis that wiped out trillions in wealth, the country’s 5,400 banks have not just recovered but are even stronger.

The number of “problem banks” dropped to 71 from 82 during the quarter, its lowest level since 2007.

Banks are issuing more loans and profiting from more service fees, according to the FDIC data.

“It is worth noting that the current economic expansion is the second-longest on record, and the nation’s banks are stronger as a result,” said FDIC Chairwoman Jelena McWilliams.

The industry’s growing profits could complicate its efforts to secure more regulatory relief from lawmakers and regulators during the second half of President Donald Trump’s term.

Congress has passed a sweeping rollback of regulations put in place after the crisis under the Dodd-Frank Act, and regulators have taken steps to offer additional relief.

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But banking executives have been disappointed at the pace of regulatory relief, and mega banks, such as JPMorgan Chase and Goldman Sachs, complain that they still need more help. The rules for big banks are still too complex and redundant, they say.

Those complaints are now less likely to resonate with Congress. With Democrats taking control of the House soon, banking executives are preparing to face more resistance, including from Rep. Maxine Waters, D-Calif., who is expected to take over as chairwoman of the powerful House Financial Services Committee.

“Make no mistake, come January ... the days of this committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end,” Waters said during a congressional hearing last week.

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