(Fortune) -- The biggest banks are minting money. Can they keep it up? Do we even want them to?
The six biggest bank holding companies - Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) - raked in $18.7 billion in profits in the first quarter.
That's more than six times as much as they earned in the fourth quarter of 2009, and their biggest haul since the financial crisis of 2008.
It's their most profitable quarter since the spring of 2007, according to data compiled by SNL Financial. Back then, the big six made $23.5 billion in the last stages of the housing bubble. Profits then crumbled in the second half of that year and in 2008, prompting a flurry of government-assisted mergers that made some of the biggest institutions much bigger.
On the surface, the big banks' profit prospects look good. The economic conditions that have helped them - low short-term interest rates, the return of private funds to capital markets and slowing losses on mortgage and consumer loans - are expected to persist throughout the year.
That should provide more fodder for a profit rebound that has sent the giant banks' shares up an average 42% over the past year, and is padding the wallets of big bank employees.
Yet not everyone is impressed. Joseph Mason, a finance professor at Louisiana State University, noted in a recent commentary that profits are likely being boosted by bank-friendly accounting rules adopted last spring.
At the same time, the banks' recent gains have been heavily concentrated in trading, which accounted for 80% of revenue in the latest quarter at Goldman and 44% at Morgan Stanley. The investment bank at JPMorgan Chase accounted for more than two-thirds of first-quarter profit.
Bank executives have warned that trading gains tend to be concentrated in the first quarter, so their profits will get less of a boost for the rest of the year.
Analysts also expect regulators to impose higher capital and liquidity requirements that will weigh on profits. But until the rules come out, it isn't clear how much.
A much bigger question centers on how vulnerable the banks' trading businesses are to a building backlash against the too-big-to-fail set.
Sen. Blanche Lincoln, D-Ark., last week introduced a measure that would force the big banks to separate their lucrative derivatives businesses from their core banking operations, which are supported by the FDIC's deposit insurance fund.
The top five bank holding companies in derivatives - JPMorgan, BofA, Goldman, Morgan Stanley and Citi - hold $280 trillion worth of notional derivatives contracts, according to the Office of the Comptroller of the Currency. That's 20 times the gross domestic product of the U.S.
Naturally, the big banks have opposed efforts to clamp down on some of their most profitable businesses, and it is far from clear that Lincoln's approach will become law.
But it hasn't escaped notice that sucker bets at the derivatives casino helped bring down AIG (AIG, Fortune 500) and played a role in the civil fraud suit the Securities and Exchange Commission brought last week against Goldman Sachs.
"At the heart of financial regulatory reform is reforming the over-the-counter derivatives market," Lincoln told the Senate Committee on Agriculture, Nutrition and Forestry Wednesday. "We must bring transparency and accountability to these markets."
Derivatives aren't the banks' only Achilles' heel on financial reform. Dallas Fed President Richard Fisher, a longtime critic of the so-called too-big-to-fail doctrine, called last week for "an international accord to break up these institutions into ones of more manageable size-more manageable for both the executives of these institutions and their regulatory supervisors."
Fisher cited a study by Bank of England financial stability watchdog Andrew Haldane disputing the supposed economic benefits of giant banks. Fisher and Haldane both noted that the cost of the government's implicit support of the biggest institutions runs well into the billions of dollars annually.
Among other things, access to cheap funds enables the giant banks to grow at the expense of smaller, nimbler, more community-focused lenders, which would be more apt to lend to small businesses than devise new ways to separate clients from their money.
In this view, the giant trading books that are now fueling big bank profits also help to make managing or regulating the giant banks essentially impossible.
"When Lehman Brothers failed, it had almost one million open derivatives contracts - the financial equivalent of Facebook friends," Haldane wrote. "Whatever the technology budget, it is questionable whether any man's mind or memory could cope with such complexity."