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In July of 2010, we were being treated to the wails of big banks like Bank of America. Regulation will kill us, they cried, as Congress threatened to impose even the teeniest modicum of regulations upon the errant monsters.

And Congress did.

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And Bank of America whined that it couldn’t possibly make any money if it had to treat credit card customers with any fairness at all:

Bank of America Corp. (NYSE:BAC) warned Friday of a multi-billion dollar hit from the latest financial regulation, pressuring shares of the banking giant. Reforms that passed Congress Thursday include potential limits on debit card interchange fees recieved or charged by issuers like Bank of America. The company estimated this could knock as much as $1.8 billion to $2.3 billion off annual revenue generated by its Global Card Services business, starting in the third quarter of 2011.

And now, three years later, said monster is posting 70% earnings boost based on higher earnings from investment banking and cost cutting, proving that regulations don’t kill business. Smart business can manage itself, and regulations keep businesses from being so greedy that they do really stupid things that end up tanking their companies and forcing taxpayers to bail them out.

“Bank of America says its second-quarter profits soared, helped by higher earnings from investment banking and cost-cutting,” Huffington Post reported Wednesday.

The results beat analysts’ expectations. The bank earned $3.6 billion in the quarter after payments to preferred shareholders. That was up 70 percent from $2.1 billion a year ago.

Bank of America, the country’s second-biggest bank by assets, has been slimming down and cutting jobs since CEO Brian Moynihan took over at the beginning of 2010, a departure from the empire-building of his predecessors. The strategy meant to make the bank easier to manage and to escape potential extra scrutiny from regulators.

It’s not just Bank of America, either. The too-big-to-fail banks are generating record profits — a fact which should warrant oversight into their investment operations for excessive risks, but I digress.

Business showed its contempt for any kind of regulation in spite of business making it clear to the rest of us that it can’t operate without rules. In April of this year, business warned (via the Boston Consulting Group, “the world’s leading adviser on business strategy”) the world that they simply couldn’t make profits like this, “Profitability at Wall Street banks has further to fall as more rules designed to prevent another financial meltdown are imposed, according to a study released today by Boston Consulting Group.” Because:

Wall Street firms from Bank of America Corp. to Switzerland’s UBS AG (UBSN) have already seen their profitability reduced by new capital requirements designed to avert future bailouts. Measures that still aren’t in place include a ban on banks trading for their own benefit, and strengthening margin requirements to make derivatives safer.

Lamenting the “15 percent to 20 percent returns achieved before the financial crisis ‘appear to be a thing of the past for most players,'” they warned that all of the increase in profits will come from the cost side, not revenue. But heck, isn’t this the argument conservatives are making on the government? We don’t need revenue, we only need to cut costs. Since Republicans are the party of business, you’d think Wall Street would be pleased as punch to follow suit. Find your profits from cost cutting, not from taking advantage of customers via 20% “revenue”.

At any rate, Bank of America did find increased profit from investment banking (something sane people suggested banks should not be doing post 2008 meltdown), so it wasn’t all cost cutting. But due to the positive impact of cost cutting on BofA’s earnings, this is yet another example of how bloated private companies can be, and it explains yet another reason why privatization so often doesn’t save us money — rather, it costs us money.

The truth is that we don’t have enough regulations in place to prevent the next too big to fail debacle, let alone protect consumers from the relentless greed of the Corporation, for which profit is its sole goal. Corporations do not have souls, and any moral values they might embody come from the people running them, not from the corporation itself. Therefore they need some regulations. But they also function best with smart regulations, because smart regulations force them to be better at their jobs, to not overreach and jeopardize America’s economic health, and to stay within certain boundaries. They encourage them to compete, to be smarter, to cut the bloat, and to operate more efficiently.

Republicans say corporations are people, but if that’s true, they are selfish, ego-driven children, prior to the development of the conscience. Regulations don’t kill business. The smart ones force businesses to grow up and take responsibility for themselves and their impact on the community and environment around them, like a child being forced to realize that there are other people in the world.

Bank of America wailed about not being able to take advantage of credit card customers but today, they’re posting a 70% jump in earnings because they had to make some changes in their business model. Welcome to the real world, Bank of America, where the taxpayers (Mommy and Daddy) aren’t relied upon to bail you out of your every mistake.



Image: Bloomberg