Tony Fratto: Banking On Healthy Banks

Was the point of the financial rescue that our banks should LOSE money?

With all of the hand-wringing this week about reported profits at JP Morgan and Goldman Sachs , it seems some people would be happier if our banks had reported losses instead of impressive gains.

It's a sign of the era of vengeance on Wall Street we're living in that such a return to health for these banks was met with winces instead of relief.

I'm not ignoring the fact that federal capital infusions last fall helped these banks survive the financial crisis, but it would be self-defeating and stupid if the result of that effort is to make U.S. financial firms uncompetitive.

• Maria Bartiromo Interview's Treasury Secretary Tim Geithner

I'm also not ignoring the fact that banks are benefiting from extraordinary access to Federal Reserve funds and other ongoing financial rescue programs. Some banks have also benefited by capturing market share because of the absence of some of their competition - Bear Stearns and Lehman Brothers.

And no doubt it's a public relations incongruity to see banks reporting profits, provisioning for bonuses and the Dow hitting 10,000 as the unemployment rate creeps toward 10%.

But the sooner big banks return to health and profitability, the sooner the extraordinary federal programs go away, the sooner the taxpayers' investments get repaid -- at so far handsome profits, and the sooner Wall Street firms get back to the business of efficiently allocating capital that will fuel job growth in the future.

We need Wall Street to be better at how it performs this necessary role, we need it to be more humble, but make no mistake - the success of the U.S. economy is significantly dependent on Wall Street doing this job.

The uneasy relationship between our financial sector and the rest of the American economy isn't new. In fact it goes back to the very roots of building the nation. Hamilton and Jefferson fought this fight, and it has caught fire with regularity ever since.

But as Treasury Secretary Geithner said in his interview with Maria Bartiromo on CNBC yesterday, our economy depends on credit and for credit to be extended in ways that create jobs, grow businesses, and allow Americans to consume, we need healthy banks.

The most important communications challenge Wall Street firms have today is to effectively explain the important links between Wall Street and Main Street, and Main Street to the global economy.

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Tony Fratto is a CNBC on-air contributor and most recently served as Deputy Assistant to the President and Deputy Press Secretary for the Bush Administration.