WASHINGTON — The heads of the two major national credit union trade associations took turns last week pointing to banks’ and thrifts’ record profits in the second quarter to fish out the bankers’ red herring.

The FDIC reported commercial banks and savings institutions achieving a net income of $38.1 billion for the second quarter of 2006, surpassing the previous quarterly earnings record of $36.9 billion set in the first quarter. This is the fifth time in the last six quarters banks have reached a new record. Strong commercial and consumer lending were credited with countering rising interests rates and narrower spreads between short- and long-term rates. Second quarter profits were 3.2% over the first quarter and 10.9% over the same period in 2005, according to the FDIC. Troubled commercial loans were up slightly, but asset quality remained strong at banks and thrifts. The second quarter marked more than two years without an FDIC-insured failure.

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