Are Wall Street financial advisors ready to be held to a fiduciary standard in all of their dealings with clients? Maybe they should be. In a Tuesday testimony about regulatory reform before the Senate Committee on banking, Housing and Urban Affairs, Paul Schott Stevens, President and CEO of the Investment Company Institute, recommended the creation of a single regulatory framework for investment advisers and broker/dealers (under the oversight of a Capital Markets Regulator), whereby both financial advisors and brokers would be held to a fiduciary standard.

Other recommendations included: (1) establishing a Systemic Risk Regulator; (2) creating a Capital Markets Regulator representing the combined functions of the Securities and Exchange Commission and the Commodity Futures Trading Commission; (3) considering consolidation of the bank regulatory structure and authorization of an optional federal charter for insurance companies; and (4) enhancing coordination and information sharing among federal financial regulators.

Everyone loved banking stocks Tuesday morning, something some attributed to Citi CEO Vikram Pandit’s announcement that the company had its best quarter-to-date performance in January and February since the third quarter of 2007. In a memo to employees, filed with the SEC, he wrote that Citi has generated $19 billion in revenue so far this year. Last week, Citi shares fell below $1. In late morning trading, Citi shares were up 27 percent to $1.33. Other banking stocks were gaining as well: J.P. Morgan was up 15 percent while Bank of America was higher by 23 percent. Meanwhile, the Dow Jones Industrial Average was up 4.0 percent, the S&P 500 was up 4.7 percent and the Nasdaq had gained 5.0 percent.

But Citi’s future is far from certain: Just a week ago, the government announced its third rescue package for the bank, and this week, U.S. officials are examining what further steps they could take if the firm finds itself again in dire straits, according to The Wall Street Journal.The U.S. government is still conducting “stress tests” begun last week on the nation’s banks in order to determine what kinds of capital injections they might need.

In related news, Glass-Steagall may make a comeback, just a decade after it was killed in 1999, says a story in Bloomberg. Some regulators and legislators say that the demise of the law, which prohibited commercial banks and securities firms from operating under a single roof, is largely responsible for the current crisis. At the very least, it looks like it will become more costly for commercial banks to continue to operate in some of the areas that were once prohibited to them under Glass-Steagall. Sanford Bernstein analyst Brad Hintz predicted that hedge funds would begin to “take over business in riskier areas such as emerging-market and distressed securities,” according to the story.

Meanwhile, the credit squeeze is far from over and the next leg is credit card debt, says an editorial in TheWall Street Journal today, penned by celebrity banking analyst Meredith Whitney, formerly of Oppenheimer, who recently launched her own firm, Meredith Whitney Advisory Group. Whitney, who became famous for making presciently bearish calls on Citigroup and predicting the ouster of its CEO Chuck Prince, says her former estimates about the amount of consumer credit that would be cut were optimistic. “Just six months ago, I estimated that $2 trillion of available credit-car lines would be expunged from the system by the end of 2010….My revised estimates are that over $2 trillion of credit-card lines will be cut inside of 2009, and $2.7 trillion by the end of 2010,” she writes. “The very foundation of credit-card lending over the past 15 years has been misguided. In order to facilitate national expansion and vast pools of consumer loans, lenders became overly reliant on FICO scores that have borne out to be simply unreliable. Further, the bulk of credit lines were extended during a time when unemployment averaged well below 6%,” she continues. Doesn’t bode well for the future of banks’ credit card businesses.