CNBC: new regulations could hurt bank profits that were actually losses

Some days I can better enjoy CNBC's craziness than others. Today I actually burst out laughing reading this article. It's predictably CNBC with the full throat defense of Wall Street special interests over investors. For networks such as CNBC, investors are worthless piles of cow dung who don't matter. Then again, the same could easily be said about the new Obama regulations which do very little to help actual investors.

The mindset both among the Wall Street cheerleader crowd as well as the White House is that the global recession and the loss of billions from retirement programs was a tough break but not worthy of significant change. Oh sure, there's big talk about reform such as the feeble "say on pay" that amounts to nothing and now there are new proposed reforms that come with splashy announcements but where's the substance? Is change really about asking those who created this recession to write the new reforms? Really? That's change? This is what makes the CNBC groaning even more funny in a not-so-funny way. Big headlines but little substance. There's a lot of that going around in the White House these days and it's getting old. Leadership means making tough decisions, not same old, same old.

With that, onto the CNBC who feels Wall Street's pain.

US banks could become less competitive—and less profitable—from President Obama's proposed financial overhaul, analysts say.

As details of the sweeping plan emerged, there was worry among investors that the sector—which has been recovering in recent months from last year's financial crisis—could take another hit.

Among the biggest concerns: that increased regulation would reduce risk and leverage—which have been the main engines of growth in recent years.

"These regulations are so sweeping, so comprehensive and so expensive there's no question about the fact that they will lower the profitability of the industry," says Richard Bove, banking analyst with Rochdale Securities. "As part of these regulations there's a demand to increase capital almost consistently, which lowers the leverage of the bank and lowers its potential profitability."

While Wall Street had been expecting the administration to take a much stronger hand in regulating the financial sector after the subprime meltdown, the Obama plan still came as a surprise.

Worry among investors? Investors? Wait a minute. Is CNBC talking about the investors who were crushed by greedy banks who make horrible decisions and forced their banks to become insolvent, thus making their value worth nothing and required bailouts from governments around the world? Gosh, I don't think I'm following this line here because actual investors would do much better with steady profits - real profits - instead of bogus numbers that led to the failure of the banks. But as always, CNBC isn't really worried about actual investors. They're worried about the Wall Street powers who implemented the failed system.

The "growth" that CNBC refers to fails to clarify that it was not growth at all. It was as fake as Sammy Sosa. It all collapsed and millions of Americans paid the price when they watched their retirement plans get crushed and then started worrying about their jobs. The worst of it is that Obama's plan is much too gentle. When you ask Wall Street types to write new regulations, how tough is it really going to be? Think about how well self-regulation has worked and then take a guess at how tough the new regulations will be for Wall Street. Wall Street wasn't alone in expecting much stronger regulations. Day after day, it becomes clearer that this administration is more about business as usual than any significant change.