By Robert Reich
The dog that didn't bark this week, let alone bite, was the President's response to JP Morgan Chase's bombshell admission of losing more than $2 billion in risky derivative trades that should never have been made.
"JP Morgan is one of the best-managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion," the President said on the television show "The View," which aired Tuesday, suggesting that a weaker bank might not have survived.
That was it.
Not a word about Jamie Dimon's tireless campaign to eviscerate the Dodd-Frank financial reform bill; his loud and repeated charge that the Street's near meltdown in 2008 didn't warrant more financial regulation; his leadership of Wall Street's brazen lobbying campaign to delay the Volcker Rule under Dodd-Frank, which is still delayed; and his efforts to make that rule meaningless by widening a loophole allowing banks to use commercial deposits to "hedge" (that is, make offsetting bets) their derivative trades.
Nor any mention Dimon's outrageous flaunting of Dodd-Frank and of the Volcker Rule by setting up a special division in the bank to make huge (and hugely profitable, when the bets paid off) derivative trades disguised as hedges.
Nor Dimon's dual role as both chairman and CEO of JPMorgan (frowned on my experts in corporate governance) for which he collected a whopping $23 million this year, and $23 million in 2010 and 2011 in addition to a $17 million bonus.
Even if Obama didn't want to criticize Dimon, at the very least he could have used the occasion to come out squarely in favor of tougher financial regulation. It's the perfect time for him to call for resurrecting the Glass-Steagall Act, of which the Volcker Rule – with its giant loophole for hedges — is a pale and inadequate substitute.
And for breaking up the biggest banks and setting a cap on their size, as the Dallas branch of the Federal Reserve recommended several weeks ago.
Wall Street's biggest banks were too big to fail before the bailout. Now, led by JP Morgan Chase, they're even bigger. Twenty years ago, the 10 largest banks on the Street held 10 percent of America's total bank assets. Now they hold over 70 percent.
rest at http://www.nationofchange.org/dog-didn-t-bark-obama-jpmorgan-1337263711
No comments:
Post a Comment