By Michael Fullilove |
When J.P. Morgan CEO Jamie Dimon announced a $2 billion loss from trades he called "stupid," "sloppy," and "poorly monitored" last week, he didn't change his mind about who he thinks should call the shots. Dimon said he would clean this mess up himself and indicated that it would be business-as-usual in no time at all. "We will learn from it, we will fix it, and we will move on." The message to those who think there should be more oversight of the biggest banks was clear: stay out.
After the crash of 2008, the country called for greater oversight of the biggest financial institutions to prevent another crash. But even after billions in taxpayer-funded bailouts, Wall Street resisted change. When the battle for financial reform took place in 2010, thundering herds of lobbyists filled the halls of Congress trying to undermine meaningful changes.
Even after Dodd-Frank Act became law, the fight wasn't over. Open public debate turned into guerrilla warfare over rules to put the law to work. For two years now, Wall Street bankers and their lobbyists have pushed regulators to water down those rules and have pushed for loopholes for their lawyers to wiggle through.
They have also urged Congress to gut the funding for enforcement at the regulatory agencies and to chip away at the independence of the new Consumer Financial Protection Bureau. And they have continued to bankroll candidates for public office and pour funds into their lobbying, hoping they can pull the strings without anyone noticing.
Too often, Wall Street banks act like they alone should decide if they have taken on too much risk. If the big bank CEOs ran different kinds of companies, ones that weren't big enough to take down the entire economy when they got it wrong, then oversight would be less critical. But reckless gambling by the big banks can affect the jobs, the pensions, and the tax bills of every American—and that means that those company's actions should be subject to careful oversight.
That's what government does: it passes laws to keep markets honest, and it puts a smart cop on the beat to enforce those laws. It is hard, but it isn't brain surgery. And it starts only if we have a Congress that has the guts to stand up to the big banks and their armies of lobbyists.
About Elizabeth Warren Democratic Candidate for U.S. Senate
James Barth Co-author of 'Guardians of Finance: Making Regulators Work for Us'
David John Fellow at the Heritage Foundation
Alex Pollock Resident Fellow at the American Enterprise Institute.
Douglas Elliott Fellow in Economic Studies at The Brookings Institution