Barney Frank: JPMorgan Chase Fiasco Reaffirms Argument For Wall Street Reform HuffingtonPost | 05/27/2012 1:37 pm Excerpts: Rep. Barney Frank (D-Mass.) says that JPMorgan Chase's $2 billion loss earlier this month reaffirms the argument for regulating Wall Street. In an interview with the Daily Beast published online on Saturday, Frank signaled his belief that if the banking fiasco occurred five years ago, there "would have been a lot more panic and nervousness in the economy." He spoke about the matter in the context of the Dodd-Frank financial reform legislation being signed into law. The Democratic congressman added that JPMorgan's loss also "reaffirms that derivatives are inherently risky, and even the best-run banks - and JPMorgan is one of them - cannot avoid the risk." Frank made similar remarks on the matter earlier this month. "When a supposedly responsible, well-run organization could make such an enormous mistake with derivatives, that really blows up the argument, 'Oh, leave us alone, we don't need you to regulate us,'" he said, according to the Associated Press. President Barack Obama echoed the stance articulated by Frank during a recent appearance on ABC's "The View." Addressing JP Morgan's loss he said, "You could have a bank that isn't as strong, isn't as profitable, managing those same bets and we might have had to step in." He added, "That's why Wall Street reform is so important." Massachusetts Democratic Senate Candidate Elizabeth Warren, the brainchild of the Consumer Financial Protection Bureau, recently asserted that big banks "cannot regulate themselves" and argued, "What has happened here is not just about JPMorgan Chase." In speaking with the Daily Beast, Frank noted, "Ben Bernanke, Sheila Bair, and Hank Paulson - three Bush appointees are essentially supportive of the things were talking about here. If you go by the Treasury, youll see the portrait outside Geithners office of Paulson, and he takes credit for a lot of the Dodd-Frank stuff. Generally, he pushed a lot of it." Addressing how the political nature of the issue he said, "But you have extremists today who really believe the free market should stand alone, and some of them say even if that causes a problem, thats where youre supposed to be." He added, "The Democrats position is the private sector should create the wealth, but you need rules to govern its behavior. The Republicans say no, leave them alone, theyll do better without it." http://www.huffingtonpost.com/2012/05/27/barney-frank-jp-morgan-chase_n_1548969.html ....... So are we expected to see more fiascos happen, more bailouts before we finally realize that greed, corruption, and a Dont Tell Us What To Do attitude will become commonplace until we get some sanity into the banks irrational and highly suspect dealings? After the Bush Wall Street Meltdown, we should have put stringent restrictions on Wall Street and have forced a haven of bailout funds at each bank in case one of their deals went south. It would have prevented more extreme losses in some banks with limited funds to cover those losses. The American people will never go for another bailout of any Wall Street bank, so Congress should get working on passing and amending legislation to protect the American people, and set up a Wall Street fund that will cover any losses of any bank doing legitimate business...the others will be allowed to fail on their own with no taxpayer funds. This bill should be brought up again before Congress, writing in more stringent rules without any loopholes, get it signed and sent to President Obama asap. If republicans show their obstructive methods in this newest instance, they should resign, as they are not doing the job they were elected to do. So after the bill is extremely fought over, stalled in Congress and finally filibustered, we can expect some populace meltdown if there are not mass resignations on the horizon.
Here is a good article of how restoring Glass-Steagall or implementing the Volcker Rule would have done little to prevent the Financial Crisis of 2008 or the JP Morgan Fiasco: http://dealbook.nytimes.com/2012/05/21/reinstating-an-old-rule-is-not-a-cure-for-crisis/ Here is my analysis and solution for the JP Morgan Fiasco:
...... 1) Both were flawed instruments with loopholes and vague instructions. They need improving with all loopholes removed and stringent rules enforced thru threat of penalty. Wall Street CEO's are criminals in business suits...the worst kind. They must walk a straight line in their important dealings involving the economy of the world. Right now, they are free to do as they like, to the great chagrin of the American taxpayers. They need to learn to play by the rules we set...not them. 2) All we need is strict oversight via a stringent bill making certain transactions illegal, with Wall Street culpable to any variance of the bill which would be devoid of any loopholes or exceptions. The Glass-Steagall and the Volker Bill were too weak to have stopped the 2008 and the current JPMorgan fiasco...but until the reason is finally removed, the proverbial finger-in-the-dike cannot work for very long. The Wall Street boys think they are too big to follow instructions, and their greed knows no bounds.
Making certain activities illegal will simply make institutions even more "too big to fail". Banks engage in riskier activities not because they are are trying to increase their rate of returns from an already satisfactory level, but because they are not able to get an equal rate of return from when there were less stringent regulations. As investments become riskier, the harder it is to control them. This amplifies each subsequent financial collapse.
Looks like the Government really needs to start regulating a ton of industries: Nokia reports huge €1 billion Q4 loss, says over 1 million Lumia phones sold http://www.bgr.com/2012/01/26/nokia...4-loss-says-over-1-million-lumia-phones-sold/ Sony Reports Record $5.7 Billion USD Annual Loss http://www.dailytech.com/article.aspx?newsid=24668 Travelers Estimates April and May Catastrophe Losses At Over 1 Billion http://wn.com/Travelers_Estimates_April_and_May_Catastrophe_Losses_at_Over_1_Billion Panasonic reports $10.2 billion loss for 2012, plasma TV sales fall more than 40 percent http://www.theverge.com/2012/5/11/3013714/panasonic-financial-results-2012 Deutsche Bank Down on €1 Billion Drop in Profits Read more: http://www.benzinga.com/news/earnin...wn-on-1-billion-drop-in-profits#ixzz1w7yZv6FZ GM posts $15.5 billion loss for Q2, third-worst in its history http://abcnews.go.com/Business/story?id=5503957&page=1#.T8LjjZlYtEI American Airlines' parent lost $1.7 billion in 1Q http://news.yahoo.com/american-airlines-parent-lost-1-7-billion-1q-133437336--finance.html ------------------------------------------------------- Difference between the companies above and JP Morgan, is that these companies lost money, JP Morgan posted $27.4B in revenues and a $5.4B profit just last quarter. Now, I expect with the hedge funds, they will continue to push JP Morgan on these trades to losing more than $2B and if JP Morgan did something illegal, there should be accountability. Look at the GM bailout, how many billions do the taxpayers have to pay? The answer is not the government stepping in and trying to legislate everything, if so, the government is going to get into a lot of businesses.
Sure does, but what does that have to do with the bill? If it was changed you'll need to show how if that's your contention. Both the Democrat controlled Senate and Obama signed off on it.
If libs like Barney Frank think JP Morgan losing two billion in the private sector through bad investments is an argument for more government I think Obama's record of losing more billions - some would say trillions - through bad public investments is a stronger arguement for less government. Or at least as long as the clueless welfare baby is in office.
L-o-n-g overdue... JPMorgan faces criminal probe over mortgage bonds Aug 8,`13 -- The U.S. Justice Department is investigating JPMorgan Chase over mortgage-backed investments the bank sold in the run-up to the financial crisis.
