Does the J.P. Morgan Loss Prove the Need for Tougher Bank Regulations? >
J.P. Morgan Was Gambling, Not Hedging
J.P. Morgan's gambling should be made illegal with a strong Volcker Rule
May 18, 2012
About Ed Mierzwinski:
Ed Mierzwinski is the federal Consumer Program director and senior fellow for U.S. Public Interest Research Group, where he also writes a blog.
J.P. Morgan Chase's gambling losses keep going up. What was just a "manageable" $2 billion loss a few days ago is over $3 billion and could easily reach $5 billion or more. Yet, J.P. Morgan's loss can be our win if we seize this moment to make the outrageous Wall Street practice of betting other people's money illegal by implementing a strong Volcker Rule to rein in proprietary trading. Of course, J.P. Morgan Chase will keep calling the trades that led to its massive and sudden losses "hedging against risk," not proprietary trading, and so will other Wall Street bankers arrayed in phalanxes in Washington to delay and weaken the Volcker Rule and keep the Commodity Futures Trading Commission off the corporate crime beat. But these are some of the same people who insist that the 2008 financial collapse wasn't their fault. It's time for the Federal Reserve and other regulators to implement the strong Volcker Rule as intended by the former Fed chairman and Sens. Jeff Merkley and Carl Levin, its champions. J.P. Morgan was gambling, not hedging. Only a strong Volcker Rule will protect taxpayers, depositors, and our economy.
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- Other Arguments
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#15920
No — The solution is not tougher regulations on banks, but stronger enforcement of existing regulations
JAMES BARTH, Co-author of 'Guardians of Finance: Making Regulators Work for Us'
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#25433
No — J.P. Morgan's loss doesn't mean more regulation is needed
DAVID JOHN, Fellow at the Heritage Foundation
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#36450
Yes — Reckless gambling by banks like J.P. Morgan can take down the entire economy
ELIZABETH WARREN, Democratic Candidate for U.S. Senate
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#44027
No — Making "traditional" loans is just as risky as J.P. Morgan's trading loss
ALEX POLLOCK, Resident Fellow at the American Enterprise Institute.
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#62125
No — Let's not overreact to the J.P. Morgan trading loss
DOUGLAS ELLIOTT, Fellow in Economic Studies at The Brookings Institution
