Geithner denies that the White House intends to cap banking industry profits

Treasury Secretary Timothy Geithner said Thursday that President Obama does not want to limit profits by banks.

Geithner had to field questions from GOP lawmakers in both the House and Senate Thursday, who grilled him on whether a recent comment by the president indicated he believed the government should control how much profit a bank can make.

Asked about a new debit-card fee from Bank of America, Obama said in a recent interview that companies don’t have an “inherent right just to get a certain amount of profit if your customers are being mistreated.”

{mosads}Geithner appeared before committees in the House and Senate to discuss the work of the new Financial Stability Oversight Council (FSOC), but also found himself having to defend those comments from Republicans who were quick to take advantage of them.

“How much profit should the government allow a bank to make?” asked Sen. Bob Corker (R-Tenn.).

“It appears as if [Obama] is equating profits with mistreating people,” said House Financial Services Committee Chairman Spencer Bachus (R-Ala.). “Does it bother you that he connects the idea of profits with mistreating people?”

Geithner assured lawmakers that the president is not interested in capping private profits but wants to improve oversight so consumers can better understand their costs.

“The president does not believe that we get to determine how profitable individual financial systems should be,” he told the Senate Banking Committee. “We’re trying to encourage much more transparency and clarity.

“What we’re trying to do is build a better system,” he told House lawmakers later in the afternoon.

To buttress that argument, the Consumer Financial Protection Bureau (CFPB) said Wednesday it was not looking to crack down on any particular bank fees. The new agency has the authority to limit any “unfair, deceptive or abusive acts or practices” tied to consumer financial products, but is focusing its efforts now on making costs transparent and easily understood, not specific prohibitions.

“This isn’t about any one fee from any one bank,” said Raj Date, the administration’s special adviser on the CFPB. “Making the costs transparent is good for consumers and good for competition.”