Thank Uncle Sam for Higher Banking Fees

Enraged from big banks getting what looked like a free ride when they got bailed out in 2008-2009, Americans demanded the government reign in the bad boys of Wall Street. U.S. citizens got what they asked for with lawmakers clamoring for increased regulation. But rarely is anything really free in life and now, Main Street is paying for it  - according to top bank analyst Dick Bove.

Bove, equity research analyst at Rafferty Capital Markets says banks are stuck in a tug-of-war between the Fed wanting them to earn less money and stockholders wanting more money and ‘someone’s going to pay and the person who ends up paying is the consumer.’

It’s certainly not the shareholders that are losing out.  As Q1 bank earnings rolled in, firm after firm beat Wall Street’s own expectations. Goldman Sachs (GS) posted its highest profit in five years. Citigroup (C) earnings jumped 16% in the quarter.  Even Bank of America (BAC) posted first quarter gains after a loss the previous year. The nation’s biggest bank by assets, JPMorgan Chase (JPM) blew away estimates.

The financial sector is still a laggard this year and JPMorgan’s CEO Jamie Dimon tried to encourage its shareholders saying the bank is ‘getting safer and stronger.’ The fact remains, it is still a tougher environment for banks to bring in as much cash as they did before the financial crisis.

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In order for banks to stay in business, they have to cover costly restrictions in midst of low rates. Bove says the American consumer is paying the price of Fed regulations because there are fewer financial services being offered at much higher prices to the average American household. Bove says ‘you’re paying more for all the banking services which you’re getting and you can thank the United States government for all of it.’