Yet again the finger is pointed at the loose practices - some would say bordering on illegal - of banks and their employees. This time, it's JP Morgan, which has just "lost" $2 billion in trades which went wrong - and not because of some so-called rogue trader. No less troubling is the fact that these behemoths in banking sail on regardless of the consequences and in America the GOP seeks to stop legislation which might curb banking excesses. Katrina vanden Heuvel, editor of The Nation, writing an op-ed piece in The Washington Post, puts it all into context.
"Consider $2 billion lost on a bad bet, plus billions more as investors dumped the stock, a providential warning. When Jamie Dimon, the imperious head of JPMorgan Chase, revealed that the bank had lost so muchon a derivatives trade gone bad, it was clear warning that, four years after blowing up the economy, the big banks are still playing with bombs.
This was no rogue trader. Dimon admitted to “many errors, sloppiness, bad judgment” in “poorly executed” derivative trades. Heads may role, but these were authorized trades by the bank’s leading — and notorious — trader, Bruno Iksil, the “London whale.”
Dimon, of course, has been Wall Street’s most vociferous critic of banking reforms, deploying an army of lawyers and lobbyists — at the cost of an estimated $7.4 million in 2010 — to try to delay, dilute and disembowel the Dodd-Frank legislation. The unrelenting legal and lobbying campaign has clearly intimidated the regulators, forcing delays beyond the dates mandated by the statute. Most recently, the bank lobby seemed on the verge of defenestrating the Volcker rule that would limit commercial banks from gambling with depositors’ money. That rule, itself a pale shadow of the Glass-Steagall Act repealed during the Clinton years, might have constrained the kind of opaque, risky bets that led to the losses.
Dimon, who was paid $23 million in 2011 (up 11 percent from the year before) has a personal stake in gutting reform. But it is inexcusable for Mitt Romney and Republicans to make repeal of all the Dodd-Frank reforms part of their campaign mantra. Banking is risky, by definition. Markets don’t self-correct. Unless banks are strictly regulated, panics and excesses are inevitable and big banks make them dangerous."
This was no rogue trader. Dimon admitted to “many errors, sloppiness, bad judgment” in “poorly executed” derivative trades. Heads may role, but these were authorized trades by the bank’s leading — and notorious — trader, Bruno Iksil, the “London whale.”
Dimon, of course, has been Wall Street’s most vociferous critic of banking reforms, deploying an army of lawyers and lobbyists — at the cost of an estimated $7.4 million in 2010 — to try to delay, dilute and disembowel the Dodd-Frank legislation. The unrelenting legal and lobbying campaign has clearly intimidated the regulators, forcing delays beyond the dates mandated by the statute. Most recently, the bank lobby seemed on the verge of defenestrating the Volcker rule that would limit commercial banks from gambling with depositors’ money. That rule, itself a pale shadow of the Glass-Steagall Act repealed during the Clinton years, might have constrained the kind of opaque, risky bets that led to the losses.
Dimon, who was paid $23 million in 2011 (up 11 percent from the year before) has a personal stake in gutting reform. But it is inexcusable for Mitt Romney and Republicans to make repeal of all the Dodd-Frank reforms part of their campaign mantra. Banking is risky, by definition. Markets don’t self-correct. Unless banks are strictly regulated, panics and excesses are inevitable and big banks make them dangerous."
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