Does JP Morgan Chases's $2 Billion Loss Show We Still Have Too Little Bank Regulation?05/14/12 Robert Lorei
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Good morning, welcome to Radioactivity. The financial industry collapse which precipitated a recession that the country is still reeling from---could it happen again? We'll talk about that in a moment... But first some listener comments about last Friday's program on which we talked about Mitt Romney's alleged involvement in bullying when he was in high school; and we also discussed health care reform. Here's what two listeners had to say.
Tape Last week the Financial Times reported "JPMorgan Chase announced a surprise $2 billion trading loss on credit derivatives trading, which chief executive Jamie Dimon blamed on 'errors, sloppiness and bad judgement' and warned 'could get worse.'
And CNN is reporting today that
â€œIn the past two years, most major banks have shut down their proprietary trading desks, which had let them make massive speculative bets on everything from market direction to housing.
Banks took that proactive step in anticipation of the Volcker Rule, set to go into effect this July, which restricts banks from operating them. JPMorgan's CEO, Jamie Dimon, has been one of the rule's most strident critics.
But JPMorgan's big bad bet, which was supposed to act as a protection against risk, would not be considered a violation of the Volcker Rule.â€
Our guest today is William Black. Black is now an associate professor of economics and law at the University of Missouri, Kansas City and the author of "The Best Way to Rob a Bank is to Own One." He was the deputy staff director of the national commission that investigated the cause of the savings and loan debacle.