Ever since the Dodd-Frank financial reform law was signed by President Obama in 2010, the financial industry has been trying to delay, change, and otherwise obstruct it, claiming that its costs are too high or that it puts U.S. banks at a competitive disadvantage. One of the highest profile targets has been the Volcker rule, which is meant to prevent banks from trading for their own benefit with federally insured dollars.

For instance, JP Morgan Chase CEO Jamie Dimon, who runs the biggest bank in the U.S., has taken issue with the rule (while admitting he hasn’t read it all). But not all big banks are opposed to the regulation. Business Insider’s Joe Weisenthal flagged a missive from M&T Bank CEO Robert Wilmers, in which he criticized big banks for “a pattern of investing in areas where they possessed little knowledge.” He went on to criticize large bank bonuses and to chastise Wall Street for lobbying against the Volcker rule:

Public cynicism about the major banks has been further reinforced by the salaries of their top executives, in large part fueled not by lending but by trading. At a time when the American economy is stuck in the doldrums and so many are unemployed or under-employed, the average compensation for the chief executives of four of the six largest banks in 2010 was $17.3 million – more than 262 times that of the average American worker. One bank with 33,000 employees earned a 3.7% return on common equity in 2011, yet its employees received an average compensation of $367,000 – more than five times that of the average U.S. worker. Thus, it is hardly surprising that the public would judge the banking industry harshly – and view Wall Street’s executives and their intentions with skepticism.

Nor can one say with any confidence that we have seen a fundamental change in the big bank business approach which helped lead us into crisis and scandal. The Wall Street banks continue to fight against regulation that would limit their capacity to trade for their own accounts – while enjoying the backing of deposit insurance – and thus seek to keep in place a system which puts taxpayers at high risk. In 2011, the six largest banks spent $31.5 million on lobbying activities. All told, the six firms employed 234 registered lobbyists.

Willmers, who oversees the 29th largest bank in the U.S. with $77 billion in assets, is surely no huge fan of Dodd-Frank, and he heaps disproportionate blame for the financial crisis onto government backed mortgage giants Fannie Mae and Freddie Mac. But his critique of Wall Street banks is spot-on, as is his assessment of the financial industry’s tarnished image. According to a Stanford University study, the number of Americans with hardly any confidence in the banking sector is at an all-time high.

2012 GOP presidential favorite Mitt Romney has been receiving the support of the Restore Our Future Super PAC. Restore Our Future has been using its millions of dollars to run misleading advertisements about Romney’s opponents.

NBC has noted that Restore Our Future is “by far the best-funded of the super PACs backing presidential candidates in the 2012 election.” And according to an analysis by the Center for Public Integrity (CPI), nearly half of the Super PAC’s donations come from the financial industry:

Of the $43.2 million raised by the attack PAC, $20.5 million, or 48 percent, came from finance industry donors, according to an analysis of Federal Election Commission data by the Center for Public Integrity.

At least $13.5 million came from private equity firms ($7 million) and hedge funds ($6.5 million) while most of the rest came from investment banks and other asset managers. So-called “non-bank lenders” that run storefront cash-for-title and payday lending operations gave the super PAC $437,500, according to the analysis.

A ThinkProgress analysis previously found that Mitt Romney is Goldman Sach’s favorite GOP candidate. And it seems that the rest of the financial industry is in the same camp.

The financial industry’s love for Romney makes sense, since Romney is both a former financial executive himself, and wants to repeal the Dodd-Frank financial reform law. He has also been non-committal with regard to closing the carried interest tax loophole, a pernicious tax break for money managers that helps Romney himself save millions of dollars. CPI noted that “the average contribution [to the Super PAC] was a little more than $83,000.”

Former Goldman Sachs trader Greg Smith publicly resigned three weeks ago, decrying the firm’s “toxic and destructive” culture in a scathing New York Times editorial. But it isn’t just traders at America’s biggest investment bank that view their clients as “muppets,” at least according to a new study from the National Bureau of Economic Research.

In 2008, the authors conducted an undercover study in which trained actors made more than 300 visits to financial advisers available to the general public through banks, brokerages, and investment advisory firms. The results: “Financial advisers not only fail to curb investors’ worst habits, they actually tend to reinforce them — especially when those habits generate fees for the advisers,” as SmartMoney reports:

So, when the actors came into these offices, what happened? Basically, the advisers advised the dummy clients to do a whole lot of things that were in the advisers’ interests, while making some adjustments based on just how much they thought the clients could be persuaded to do.

Most strikingly, the advisers nudged people in low-cost index funds toward high-fee actively managed funds — blatantly making their clients worse off.

The researchers used an array of portfolios with differing strategies and degrees of risk in the study, but found that financial advisers recommended a change in strategy — often toward “active management” that increased their fees or commissions — 85 percent of the time. And when advisers did mention fees, they “downplayed them without lying,” the authors of the study found.

Even worse, those without knowledge of financial advising and their own portfolios aren’t aware of how bad the service can be. Despite the study’s findings, the actors were willing to return to 70 percent of the advisers.

House Republicans have been preparing to move a new jobs bill aimed at giving a 20 percent tax credit to small businesses. However, as Bloomberg News noted today, the tax break could very well be given to businesses that most certainly don’t need it — hedge funds:

A Republican proposal to give small businesses an extra 20 percent tax deduction may yield cuts for some multibillion-dollar hedge funds, law firms and other enterprises that create significant profits with few employees.

Republicans hope to release details of the bill during the week of March 19, said Laena Fallon, a spokeswoman for Representative Eric Cantor, the House majority leader. Cantor told House members in a memo last month his plan would let “every” business with fewer than 500 employees deduct 20 percent of its profits.

That approach would depart from restrictions in an earlier version.

Earlier versions of the bill would have prevented the break from applying to the financial industry. “They’re just trying to cut taxes for people with a lot of money,” said Citizens for Tax Justice Director Bob McIntyre. “That’s what they always do. That’s what they are.”

Hedge fund managers are some of the richest people in the world, making literally billions of dollars annually. Even at the depths of the Great Recession, the average hedge fund employee made nearly $800,000.

Hedge funds aside, there’s certainly no wisdom in giving every single small business a tax break because then firms that have been making huge profits will reap a windfall from the government for no real reason. If they are already making huge profits and aren’t hiring, it’s exceedingly unlikely that another tax break on top will change anything.

What’s really holding back small businesses is a lack of demand in the economy, and there’s no reason for businesses to hire, no matter how many tax breaks they receive, unless they have an expectation of more customers. As the chief economist for the conservative National Federation of Independent Business explained, “if you give a small business guy $20,000 he’ll say, ‘I could buy a new delivery truck but I have nobody to deliver to.’”

The Republicans’ plan, if this is the approach that they settle on, will amount to nothing more than another giveaway to financiers that are already bringing home huge paychecks.

As House Republicans and the U.S. Chamber of Commerce team up for their latest assault on the Dodd-Frank financial reform law, specifically a rule reining in banks’ risky trading, the Federal Deposit Insurance Corporation (FDIC) has released its latest Quarterly Banking Profile, which shows that GOP claims regarding Dodd-Frank killing America’s banks have little truth behind them.

The release reports that FDIC-insured commercial banks and savings institutions earned $26.3 billion in profits at the end of last year — a figure that is up 23 percent from earnings reported in the final quarter of 2010 — making 2011′s fourth-quarter the most profitable period for the industry since 2006:

For the year, earnings hit $119.5 billion — the most since 2006.

Banks with assets exceeding $10 billion accounted for almost all of the earnings growth in the fourth quarter. While they make up just 1.4 percent of U.S. banks, they accounted for more than 81 percent of the earnings.

Those banks include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most of them have recovered with help from federal bailout money and record-low borrowing rates.

Many of these same banks complained last year that new regulations mandated by Congress have hurt their ability to make money and moved to charge new fees to make up the difference.

Clearly, the FDIC’s findings stand contrary to the GOP’s claims that the law “hinder[s] American markets, competitiveness and job creation” and is “killing the banking industry now.” In fact, the number of banks on the FDIC’s “problem list” declined 11 percent, from 844 to 813, while total loans and leases increased by $130.1 billion, as did insured deposit accounts, which increased by $249.7 billion during the quarter.

– Fatima Najiy

Ever since it was first proposed, the financial services industry has launched a withering assault on the Volcker rule, a regulation meant to rein in the ability of banks to gamble with their customers’ deposits. The banks were able to water the rule down before it was passed into law — thanks in no small part to Sen. Scott Brown (R-MA) — and have now submitted a heap of comments to the regulators charged with implementing the rule, in hopes of watering it down even further.

But not all members of the financial industry are against the Volcker rule. In fact, former Citigroup CEO John Reed submitted a letter to the Securities and Exchange Commission saying that the rule does not go far enough in preventing the banks from engaging in risky trading with deposits:

When a firm is focused on market gain, it will employ every available device to achieve those gains – including taking advantages of clients and putting the firm at risk. And. when it is large enough to be a threat to systemic stability, it is able to avoid the constraints of market discipline which apply to smaller actors In short, little will stand in the way of it becoming a threat to systemic stability.

The Volcker Rule is a critical response to this problem. and the proposed rule takes an important step forward in pulling into place the prohibition on proprietary trading and positions in private funds. However, I am concerned it docs not offer bright enough lines or provide strong enough penalties for violation.

Reed called for “specific and vigorous penalties” for traders who break the Volcker rule, as well as a provision requiring banks’ senior officers to sign forms attesting to their firms compliance with the rule.

Reed is no saint when it comes to regulatory matters, as he was instrumental in bringing down the barrier between investment banking and commercial banking in the 1990s, which laid the groundwork for today’s mega-banks and the financial crisis of 2008. However, he has since acknowledged that his position then was a mistake, and has pushed for strong financial reform, including breaking up the biggest banks. (HT: Huffington Post)

In the fourth quarter of 2011, Rep. Spencer Bachus (R-AL) reported raising $388,895.26 in campaign contributions. According to a ThinkProgress analysis, at least 44 percent of that came from political action committees and individuals connected to real estate, insurance, banking, and finance industries — areas overseen by the House Financial Services committee Bachus chairs.

According to his latest disclosure, more than $173,000 of Bachus’ total haul came from the financial sector. Over the past quarter Bachus received at least:

– $144,805 from employees of and PACs for banks, financial services firms, and venture capitalists. This includes $7,500 from Wells Fargo’s corporate PAC, $5,000 from U.S. Bancorp’s PAC, $5,000 from UBS Americas’ PAC, and $5,000 from payday lender Advance America’s PAC.
– $15,810 from insurance industry political action committees and from insurance agents for State Farm Insurance Co.
– $12,500 from real estate PACs and individual real estate agents and realty investors.

In 2010, Bachus candidly admitted that he believes Washington’s role is “to serve the banks.” As chairman, he has sought to cut foreclosure prevention programs and to repeal many of the the key reforms in the Dodd-Frank financial reform law.

Bachus, now in his tenth term in Congress, has also been in hot water for his financial investments. In November, CBS News’ 60 Minutes reported that one day after receiving a private briefing from the nation’s chief economic officials on the extent of the financial crisis in 2008, Bachus bet that the stock market would tank, “buying option funds that would go up in value if the market went down” and netting about $28,000. After the report broke, Bachus attempted to seize the high ground by moving a bill to ban the sort of insider trading he was accused of, but Republican leaders blocked his effort. One colleague reportedly said at the time that House Republicans were “not going to cover Spencer’s ass by passing a half-baked bill.”

Bachus is term limited as chairman of the Financial Services Committee, and has said that he won’t seek a waiver to keep the seat in the next Congress.