Banks in the crosshairs: 'Tough new reforms' loom

Jack Lew and Preet Bharara at Delivering Alpha
David Grogan | CNBC
Jack Lew and Preet Bharara at Delivering Alpha

That shot across the bow you saw fired this week came from government authorities, and it was aimed straight at Wall Street.

The Delivering Alpha conference, presented Wednesday by CNBC and Institutional Investor, featured two big splashes—Treasury Secretary Jack Lew and U.S. Attorney Preet Bharara both espousing a get-tough-with-big-banks policy in respective terms of reducing systemic risk and punishing bad behavior.

Both reflected on how Wall Street banks had endangered the economy during the financial crisis, and they pledged actions to prevent it from happening again.

(Read more: Lew: Dodd-Frank helped save the banking system)

"What we learned from this catastrophe was we cannot let our vigilance wax and wane," Lew said. "We cannot afford to take 50 years off, or even five. The financial system is dynamic. Firms are innovative, and sources of risk change."

Because Lew's five-month tenure has been otherwise quiet, his remarks felt all the more pointed.

At one juncture, he seemed to go straight after JPMorgan Chase CEO Jamie Dimon.

In remarks during the firm's quarterly earnings conference call, Dimon had bemoaned the appearance that U.S. banks would be at a disadvantage if they were held to higher capital standards than their global counterparts.

(Watch: All the Delivering Alpha videos in one place)

That's tough, Lew seemed to say.

"Make no mistake: We will not let the pursuit of international consistency force us to lower our standards," he said. "The United States has demonstrated important global leadership in putting in place tough new reforms.

"And the clarity and reliability of our laws do not just provide a bulwark against danger, they serve as an impetus for a race to the top rather than a race to the bottom."

Bharara followed Lew to the speakers' stage.

Whereas last year the U.S. attorney for New York's Southern District—which includes the Wall Street banking epicenter—enthralled the audience with a stream of quips and barbs, his tone this year was a bit more somber and foreboding.

"It's not a laughing matter and it's not a joking matter," Bharara said of his office's investigative power.

(Read more: No one is too big to jail, Wall Street cop says)

"People should have a healthy respect for the law," he added later. "People should be afraid that bad actions they committed in the past are going to catch up with them."

There was little room for interpretation. Bharara was warning Wall Street that the days of escaping bad behavior with a slap-on-the-wrist fine are over.

OK, so such warnings have been sounded before. But the thirst for Wall Street blood clearly has intensified.

The remarks come as big banks report another huge earnings quarter.

Profits are up 22.1 percent for financials on the S&P 500, and every Wall Street bank has beaten earnings expectations thus far.

For the first time since 2007, the top 10 investment banks in the world have surpassed $1 billion in revenue, according to Dealogic.

(Read more: Enjoy it while it lasts: Bank earnings face trouble)

The big second-quarter profits come off a quarter in which banks earned a record $40 billion, according to the FDIC.

The Delivering Alpha remarks, though, cast a definite pall on what happens from here.

Bharara went as far as to encourage journalists to join the efforts and get more vigorous in their reporting.

"Show where there's bad conduct happening, where there's fraud happening, where people are not paying attention to things," he said. "Simply being a day ahead of who's going to be arrested and at what place and having cameras outside—I'm not sure that accomplishes a lot for the public."

—By CNBC's Jeff Cox. Follow him on Twitter@JeffCoxCNBCcom.