One of the most common arguments employed by the banking industry and conservatives in Congress against the creation of an independent Consumer Financial Protection Agency (CFPA) — which would be empowered to police abuses in consumer lending — is that that it will divorce consumer protection from the “safety and soundness” of banks, unnecessarily undermining the health of the financial system.

“What we don’t want to do is separate out the regulation of the entity from the regulation of the product, which is what the CFPA would do,” Scott Talbott, Senior Vice President for Government Affairs at The Financial Services Roundtable, has said. Creating a CFPA “would actually impair the ability of regulators to monitor the health of our financial institutions and undermine the safety and soundness of our banking system,” added Tom Donohue, president of the Chamber of Commerce.

One of the organizations leading this charge has been the American Bankers Association, which has said that “a more workable approach [to consumer protection] would be to bolster consumer protection and oversight while ensuring that the existing regulatory agencies retain both safety and soundness and consumer protection responsibilities.” But the ABA evidently hasn’t always felt this way.

As Elizabeth Warren, Chairman of the Congressional Oversight Panel for the Troubled Asset Relief Program, pointed out in a Politico op-ed today, the ABA in 2006 was advocating that consumer protection be broken away from bank regulation. Here’s what the ABA has to say regarding proposed guidance on nontraditional mortgage products:

The Guidance combines safety and soundness guidance with consumer protection guidance, creating confusion that is best addressed by separating the them [sic]…ABA is concerned that these apparent changes in supervisory and enforcement policy may arise simply from the Board trying to marry safety and soundness supervision with consumer protection supervision. The result of this marriage of inconvenience between supervision and consumer protection appears to blur long-established jurisdictional lines…[T]he combination of safety and soundness guidance with consumer protection guidance appears to create confusion in the Guidance.

ABA concluded that it “does not believe that the lender’s role is to limit the borrower’s choice of mortgage products or features for which he or she qualifies.” So the ABA explicitly argued that consumer protection is a responsibility is best taken on by an entity other than the bank regulators, adding that combining “safety and soundness” regulation with consumer protection would create confusion! As Warren put it, “this 2006 memo illustrates the ABA’s real consistency — consistent opposition to meaningful reform.”

The argument that consumer protection will undermine bank safety and soundness only holds water if you think that banks have to rip off customers in order to make money. And the ABA’s memo shows that it doesn’t actually believe in its own rhetoric; it’s just resorting to whatever argument will be most convenient in its push to derail financial reform.

Yesterday, the Treasury Department announced that it is preparing to offload part of its share in Citigroup, earning more than $7 billion in profits on taxpayers’ investment in the failed financial behemoth. The fact that the money pumped into Citi will not ultimately result in a loss has led the financial services industry to restart its fight against a bank tax, using the argument that profits from the Troubled Asset Relief Program (TARP) render the tax unnecessary:

‘Large banks are repaying TARP with a profit to the taxpayer – every penny is coming back,’ said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable. ‘The purpose of the bank tax was to ensure the taxpayers are repaid. The repayments with interest by large banks should eliminate the need for any bank tax.’

Talbott’s assertion makes it seem like ensuring that taxpayers make money from TARP is the sole purpose for a bank tax (and to be fair, the Obama administration initially sold the tax this way). But the bank tax is about more than that. It’s also meant to level the playing field between the largest “too big to fail” banks, account for the myriad guarantees that the banks received outside of TARP, and, depending on how it’s designed, build a fund to prevent taxpayer dollars from being tapped to unwind a failing financial firm.

Of course, to make it seem like TARP was the sole rescue program from which the banks benefited is nonsense. As the AP’s Stevenson Jacobs pointed out, “the banks benefited heavily from other subsidies, including the $182 billion bailout of AIG. Tens of billions of that money went to banks that had suffered losses with AIG, and the banks didn’t have to repay a penny.” They were also allowed access to cheap loans via the Fed’s discount window. No policy has been enacted to account for that support.

And nothing about Citi’s repayment fundamentally changes the fact that the bank is considered “too big to fail” and poses a systemic risk to the entire financial system. As Felix Salmon put it, “Citi is still too big to fail, and therefore still has an implicit government guarantee on top of all the explicit guarantees which are still floating around. The government might make a nominal profit on the sale of its stock, but that means effectively ignoring the enormous value of those guarantees to Citi, which is still the shakiest bank in America from a systemic-risk perspective.”

Talbott is essentially arguing that, so long as TARP is repaid in full, things can just go back to the way they were. But financial reform needs to both address the deficiencies that led to the last crisis and build a system that can better withstand the next crisis. The bank tax is a part of that.