JPMorgan's reckless, $2 billion fiasco appears to have a silver lining of sorts: the bank's bad bets help demonstrate the need for safeguards in the system. In his new column, Paul Krugman thanks JPMorgan Chase CEO Jamie Dimon for offering "an object demonstration of why Wall Street does, in fact, need to be regulated."
And yet, somehow, some still don't see it that way. On NBC's "Meet the Press" yesterday, Republican National Committee Chairman Reince Preibus, common sense be damned, argued that the JPMorgan mess changes nothing.
Host David Gregory asked a straightforward question: "In light of the losses on Wall Street this week, you think we need less financial regulation rather than more?" In Preibus' mind, it's not even a close call: "I think we need less." The RNC chief added that Democrats have "made things worse" by approving new safeguards and adding new layers of accountability to the financial system.
It reminded me of an Upton Sinclair line: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it."
This really isn't that complicated. In 2008, Wall Street, left to its own devises, nearly collapsed the global financial system. Four years later, institutions like JPMorgan are still taking enormous risks in reckless schemes. It's hard to even conceive of a straight-face argument against sensible regulations in light of recent developments, but the chairman of the Republican National Committee was on national television anyway, arguing that policymakers should be doing less.
Mitt Romney, the Republicans' choice for president, believes the same thing, calling for eliminating Wall Street safeguards and replacing them with nothing.
As we discussed on Friday, this seems politically suicidal – who wants to vote for a presidential candidate running on a "leave Wall Street alone" platform? -- but the GOP believes the public hates government regulation, at least as much as voters hate the Wall Street elite, so the party has no qualms about its position, regardless of the JPMorgan fiasco.
Leave a Comment:
Thanks to conservative intransigence and rampant influence peddling on Capitol Hill, virtually nothing has changed in our fiscal regulatory policy since the financial collapse of 2008. This economy and American taxpayers are just as vulnerable to the idiotic and greed-induced decisions and incompetence of big banks and corporate America. Every effort to enact real and substantive reforms that would break up these deadly monsters has been met with virulent opposition from GOP lawmakers whose campaign accounts and super-PAC's are padded with Big Bank cash. http://www.sunstateactivist.org
Let's noit rush to judgment. And, more importantly, let's not let the idiots in DC rush to implement foolish regulations. $2 billion is a lot of money, but don't focus on the absolute number. Look at the relative number compared to JPM's capital. It's tiny. Banking is a risky business. Lending is a risky business. Get the facts before you rush to judgment and devise solutions.
Yes BUT the overall 'bet' was for 100 billion. That they only lost 2 billion THIS time was pennies compared to what they could have lost. And 100 billion would have rocked the economy BIG TIME. Stop with the 'risky business' decision. Regulation stops the 'bets' that could hurt us ALL. To act like it can't is disengenuous at best.
The GOP is ridiculous. They've jumped the shark. Dodd-Frank didn't work because it wasn't fully implimented. Then the moment that it's mentioned that the Volcker Rule would have fixed this issue, it's "I'm not a financial expert"...yeah, ya aren't...so STFU.
Banks are willing to risk massive amounts (and lose smaller-but-still-massive amounts), but decline to loan to citizens and small businesses because "it's too risky"? Something smells of horse@!$%# here, and I don't live near a farm.
Follow the money. They get paid to have these policy positions. And greed wins out every time.
this happened on President Obama's watch- under his regulators- and some how this a problem caused by republicans- amazing- is President Obama not responsible for anything?
Ignorance is bliss. Studio 54 is a thing of the past in which famous young celebrities were enticed by the smell of money and cocaine. And if you looked just right you could enter this secret society where eventually your good looks turned into crud.
Yes. Obama is to blame for not hitting harder sooner.
I guess you have to go further than just hating on the President and look at who actually VOTED in CONGRESS to make Dodd Frank 'toothless'. If you think that this was all 'OBAMA' you are naive.
Just to make sure we're talking about the same thing...
This didn't cost the taxpayers a dime. It cost JP Morgan $2 billion. I was rather expecting a loud cheer that Wall St rich guys now have less money.
Didn't this cost JPMC shareholders anything?
Indeed it did, but they're rich guys too.
No, actually. I just checked my IRA portfolio summary, and wouldn't you know it, there is JPMC. Now, since I know I am not a rich gal, and can't afford my investments to go down the drain, maybe if I wrote a nice note to Jamie Dimon and asked him politely to stop "being stupid", I could sleep better. As Ezra said the other day, "... the point of the Volcker rule -- and of financial regulation more generally -- isn't to punish banks for being evil. It's to protect the rest of us from banks being stupid."
JP Morgan is the biggest US bank and a $2 billion loss is a rounding error.
The push to deregulate has been almost a ceaseless task , driven hard, being pushed on us, they are trying to ram this idea down our throats (the GOP). Why? It's as if they want to see the collapse of the Banks and Wall Street. They expect to be able to pull their money out in time like they did last time in 2008. I beleive if the Banks and Wall Street conducted their business honestly and stopped playing Monopoly with people's money the Banks and Wall St. could survive. They should all follow suit and revert back to better times when Greed wasn't a threat to mankinds' survival. When you change things to benefit only a few the house of cards starts to fall and then you are left with nothing. If they don't like playing by the rules perhaps they should not play at all. I'm sure they have enough money now so, they can leave the rest of us alone to clean up their mess. Regulations are for regular people. Gambling is very risky our Country can't handle another trip to the Casino, we have already been taken to the Cleaners. If the villains have come out unscathed, what's to stop them from striking again? Especially when they have gotten away with it. So, when they start talking about deregulating you know who is actually whispering in their ears. The same people who are running around free and who want to once again bring our Great Nation down. They are free to destroy the U.S. and they don't give a rats' ass. They have enough money to live anywhere else they wanted to and they will not even lose one nights' sleep in the process. In some perverse manner these Republicans are at the mercy of their own doing. They haven't got a clue as to how to get out of this mess. They have already bowed down and are worshiping their god "The Almighty Dollar" .
On the contrary -- 2008 worked great for them. Wall Street has a perfect insurance policy: they take huge risks, and when they pay off the Street pockets the money. When it all goes bust, Main Street picks up the tab. And there aren't even any premiums on that policy.
In a game like that, the bigger the risk the bigger the net payoff. Anything that reduces their ability to take high-stakes risks also reduces their profits. Also, transparency gets in the way of capitalizing on asymmetrical information.
This is yet another example of Wall St.spitting in the face of taxpayers.We bail them out, they turn around and laugh at us. How arrogant these money people are, they wo'nt even aknowledge there are other classes of people here in the real world. And now they,along with the RNC,AND Mitt Robme insist there is no need for regulation. Once again President Obama and his team are right and republican's along with Robme are wrong.So who would you pick to run the country,a known Wall ST.CEO such as Robme or a President that is on our side?
Does this mean we can now quit thinking of Jamie Dimon as the successor to Larry Summers? Please let this mess at JPMorgan-Chase relieve us of having to consider that notion anymore.
Reince Preibus (minus) vowels = RNC PR BS.
The derivative hedging game played by JPMorgan Chase is no different than that played by AIG in 2008.
Yet, Jamie Dimon tells us that Chase had merely “made a terrible, egregious mistake.”
He might as well have said that Chase was wrong in raising in a game of poker, when it would have been more prudent and folded. But why was Chase busy gambling in the first place -- right after our economic meltdown, and while fighting government regulation?
One answer is because Chase could bear the gambling losses.
That’s right. With $2 trillion at hand, Chase can yawn when $3 billion goes down the tube.
Nonetheless, Dimon tells us that he sees no problem with the government dismantling big failing banks. This is nice to know because the government should start dismantling big banks before they fail -- and before they have another chance to take us down with them.
The important lesson then from this Chase episode is not that stringent regulations are needed to reign in on derivatives, but that banks big enough to take huge hits standing up are ripe enough for us to chop down to size.
To the extent that Preibus is talking his book and its full of manure the article is 100% correct. what it doesn't do is realize that the way we arrived here is President Clinton got in bed w/ the financial institutions in the 90's; anybody remember when I die I want to come back as the bond market. t the extent it is still happening on President Obama's watch it is his fault or that his staff all received jobs w/ financial institutions during the 2000's-Rubin Summers and Rahmbo.
One President Obama has the <a href="http://www.gpo.gov/fdsys/pkg/PLAW-110publ343/pdf/PLAW-110publ343.pdf">TARP regulation</a> which as law supersedes the Volcker rule and/or Dodd/Frank. It gives the Treasury Sec, a Presidential appointee the authority to do whatever is necessary to right the economy. So if the financial institutions, aka the biggest Welfare Queens ever, with both their implicit guarantee from the Fed and their legal guarantee of FDIC are again threatening the world wide financial system the institution should be at minimum severely chastised-taking away JPM authority to be a authorized dealer in Fed securities is a good start.
Two, the President's insistence that we get back to some sort of above board rule of law and demand that the other political institutions do their jobs has not worked. Lobbyists continue to just queer everything. Congress is in gridlock both because of American Taliban intransigence and Dummycrat's being incapable of making a decision beyond the narrow point of their sinecure and their fear of losing it as they have no marketable skills.
this leaves the President w/ the big stick and his failure to have used it is likely to cost him the election as everyone remembers its the economy stupid. When the economy goes south in an election year the incumbent loses.
If you want a full explanation of how Wall Street and the banks have killed Dodd-Frank, then go to Rolling Stone and read Matt Taibbi's current article on how the bill has been emasculated. JP Morgan and the rest of the banks have gone back to business as usual and are still gambling with derivatives. These banks are betting that Congress will bail them out again. Dodd-Frank has been a failure because the banks and Wall Street have killed it. All of this can be fixed by breaking up the banks.