“Exceptions, Exemptions And Loopholes”: How J.P. Morgan Chase Has Made The Case For Breaking Up The Big Banks
J.P. Morgan Chase & Co., the nation’s largest bank, whose chief executive, Jamie Dimon, has lead Wall Street’s war against regulation, announced Thursday it had lost $2 billion in trades over the past six weeks and could face an additional $1 billion of losses, due to excessively risky bets.
The bets were “poorly executed” and “poorly monitored,” said Dimon, a result of “many errors, “sloppiness,” and “bad judgment.” But not to worry. “We will admit it, we will fix it and move on.”
Move on? Word on the Street is that J.P. Morgan’s exposure is so large that it can’t dump these bad bets without affecting the market and losing even more money. And given its mammoth size and interlinked connections with every other financial institution, anything that shakes J.P. Morgan is likely to rock the rest of the Street.
Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).
Dimon argued that the financial system could be trusted; that the near-meltdown of 2008 was a perfect storm that would never happen again.
Since then, J.P. Morgan’s lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule — creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown.
And now — only a few years after the banking crisis that forced American taxpayers to bail out the Street, caused home values to plunge by more than 30 percent and pushed millions of homeowners underwater, threaten or diminish the savings of millions more, and send the entire American economy hurtling into the worst downturn since the Great Depression — J.P. Morgan Chase recapitulates the whole debacle with the same kind of errors, sloppiness, bad judgment, excessively risky trades poorly-executed and poorly-monitored, that caused the crisis in the first place.
In light of all this, Jamie Dimon’s promise that J.P. Morgan will “fix it and move on” is not reassuring.
The losses here had been mounting for at least six weeks, according to Morgan. Where was the new transparency that’s supposed to allow regulators to catch these things before they get out of hand?
Several weeks ago there were rumors about a London-based Morgan trader making huge high-stakes bets, causing excessive volatility in derivatives markets. When asked about it then, Dimon called it “a complete tempest in a teapot.” Using the same argument he has used to fend off regulation of derivatives, he told investors that “every bank has a major portfolio” and “in those portfolios you make investments that you think are wise to offset your exposures.”
Let’s hope Morgan’s losses don’t turn into another crisis of confidence and they don’t spread to the rest of the financial sector.
But let’s also stop hoping Wall Street will mend itself. What just happened at J.P. Morgan – along with its leader’s cavalier dismissal followed by lame reassurance – reveals how fragile and opaque the banking system continues to be, why Glass-Steagall must be resurrected, and why the Dallas Fed’s recent recommendation that Wall Street’s giant banks be broken up should be heeded.
By: Robert Reich, Robert Reich Blog, May 10, 2012
There was good news and bad news for Sarah Palin in the self-consciously ridiculous Public Policy Polling survey of Iowans for their preferences in the 2016 presidential contest (I mean, Caucus campaigning starts pretty damn early, but not this early!). On the one hand, she has an impressive 70/17 favorable/unfavorable rating among Iowa Republicans. On the other hand, only 10% of them chose her as their 2016 presidential favorite, tied for fourth with Jeb Bush.
But there’s fresh evidence that Palin’s real motive in life, other than continuing to pose as the ultimate pain-free martyr, is to keep the family name in our faces for, well, as long as any of us live. And it’s on that depressing note that I observe in terror that Bristol Palin is back in the news as a political blogger.
Yes, on the day after the president’s announcement of support for same-sex marriage, Alaska’s best known sexual abstinence advocate/unwed mother is lighting up conservative browsers everywhere with an attack on Obama for paying attention to his daughters’ opinions.
If you have your blood pressure under control, you can read the whole mess, but her train of logic seems to be that everybody gets all alarmed by the possibility that Christian women might submit to their husbands if they run for public office, and here’s The One submitting to his daughters, and everybody thinks that’s just fine!
I got angry enough about Bristol’s planted axiom that only conservative Republican women like Michele Bachmann (and presumably Bristol’s own mother) are “Christians” that I barely made it to the second howler. Not that she is listening, but someone really ought to inform her that people wondered about Bachmann submitting to her husband because she was repeatedly on record saying that’s exactly what she did, as a matter of Divine Law. Lots of Dominionist-influenced Christian Nationalists say and think that, you betcha! The questions did not come out of the blue.
While they are at it, Ms. Palin’s interlocuters might want to explain to her that when discussing same-sex marriage as something of a generational issue, it was rather natural for Obama to mention the views of immediate family members from a younger generation! I mean, they are right there at the White House; he didn’t have to hire a pollster or anything!
To be clear, I am not mocking Bristol Palin when I offer these responses. She has the last laugh on me, and on all of us. Like her mother, she has a knack of luring people who know better into paying attention to her rants. In my defense, I’ll say that some of Sarah Palin’s most casual, fact-free rants have wound up in national GOP talking points, leading millions of anxious seniors to believe that the President of the United States wants to have them euthanized. It’s sometimes best to get a head start on Palin-generated nonsense, or in this case, on the next generation of Palins.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, May 10, 2012
Here’s a little something everybody ought to know about, from Bloomberg News. They tallied up private-sector job creation since Kennedy’s presidency. Democrats have held the White House for 23 of those years, according to Bberg, and Republicans 28. So fill in this blank: The U.S. economy has created ___ private-sector jobs in the Democrats’ 23 years, and ___ such jobs in the Republicans’ 28 years.
Before we get to the answer, let’s toss in a little background. The political scientist Larry Bartels published a book, Unequal Democracy, on precisely this subject in 2008. I reviewed it for The New York Review of Books. It was interesting because social scientists like Bartels don’t want to think that politics really drives events, but Bartels looked at the evidence on job creation and economic growth under every president since Truman and reached certain inevitable conclusions.
Does that give you any hints? I’ll tell you: Adjust your first-instinct numbers. Then adjust them again.
Ready? Now I’m just killing time so that the answer will be below the fold.
The answer is that 42 million jobs were created under Democratic presidents, and 24 million under Republicans. You can check out the chart here. The champion of course is Clinton, with 20.8 million under Bberg’s numbers. Then comes Reagan at 14.7. Then come Johnson and Carter (yep, Carter). Then Nixon. And so on.
George W. Bush? The private sector lost 600,000 jobs. Imagine. In eight years, he did not create a single job. Obama is now in positive territory to the tune of 40,000, so even though Dubya handed him the biggest economic catastrophe in 80 years, he at least is in the black.
Anyway. The numbers are amazing. And it gets even better. Bloomberg’s Bob Drummond also counted up the number of public-sector jobs created in the respective 23 and 28 years. Results: Federal, state, and local government payrolls grew by 7.1 million under Republicans, and 6.3 million under Democrats.
So drink this in: Private-sector job growth is massively greater under Democrats, and it’s Republicans who’ve increased the public tit.
Now, some sophisticates will say well, you can’t really measure these things from the day a president took office. Better to start when that president’s policies started taking effect. But that is exactly what Bartels did (read my Review piece for details)—and it still came out to a huge advantage for Democratic presidents. In fact, the Obama jobs numbers would be pretty terrific under this methodology, because he wouldn’t have all those Bush-created job losses hanging around his neck. And at the front end, Dubya got credit for some jobs that Clinton’s policies actually created.
If I were the head of the DNC, I’d buy a billboard on a prominent roadway in every county in America and slap these numbers up there.
By: Michael Tomasky The Daily Beast, May 10, 2012
In the case of Mitt Romney, when it comes to civil rights issues, he is not his father’s son.
His dad was a good guy—as Michigan’s governor, he marched for civil rights, embraced women’s rights and helped labor unions to obtain fairer treatment at the bargaining table in Michigan—and it was always reasonable to hope that the kid would inherit at least some honorable qualities.
But Mitt Romney’s response to President Obama’s announcement of support for marriage equality has been so tone deaf and exploitive that I suspect even George Romney would be disappointed in the kid. The presumptive Republican nominee for president says: “I do not favor marriage between people of the same gender, and I do not favor civil unions if they are identical to marriage other than by name.” And his campaign has indicated that it intends to make a big deal about the president’s shift in stance. Romney’s senior adviser, Ed Gillespie, says the Romney camp is prepared to campaign on the issue of enacting a constitutional amendment to ban same-sex marriage.
So one of the wealthiest and most elite men ever to seek the presidency of the United States will campaign on a promise to use the constitution of the United States to bar equal protection under the law.
This is not the way Romneys used to respond to the march of social progress.
When President John Kennedy clearly and unequivocally embraced the civil rights cause—by very publicly inviting the organizers of the March on Washington for Jobs and Freedom to the White House—George Romney was the rising star of the Republican Party and a potential rival to Kennedy. Yet, he hailed the president for doing the right thing. Indeed, he prodded Kennedy to do a bit more.
Mitt Romney, on the other hand, seems to be in the “If Obama’s fer it, I’m agin’ it” camp. And there are no signs that he will try to guide his Republican Party toward a moderate stance on what remains a hot-button social issues. Which, of course, explains why President Obama is likely to win the 2012 election over the lesser Romney.
Obama’s embrace of marriage equality, while typically tortured and over-cautious, was entirely appropriate morally.
It was also VERY smart politics.
National polling shows that most Americans favor marriage equality, but there remains a solid 45 percent that is opposed.
On the surface, that might seem like a serious concern for a politician who would prefer to be liked to everybody—or, at the least, most everybody.
But presidential politics is not a national affair. It is a series of state elections. And opposition to marriage equality is disproportionally concentrated in the south, border states and the interior west—where Obama is never going to win.
There are also pockets of significant opposition in some battleground states, such as Ohio and Pennsylvania. But, again, the most fervent foes of same-sex marriage have a lot of other problems with Obama. So his shift in stance is not pushing away many voters. Even among the older voters of Florida, who may not be all that comfortable with “the love that dare not speak its name” speaking its name, there are other priorities—like keeping Romney and Paul Ryan from bartering off Social Security, Medicare and Medicaid.
So Obama’s not risking much by endorsing same-sex marriage. But he is gaining a lot.
The greatest challenge for Obama’s 2012 reelection strategy is—or, perhaps we should say, “was”—a lack of enthusiasm among the young voters who got so excited about his 2008 campaign. And young voters like marriage equality, a lot. It polls over 70 percent, according to Gallup. Indeed, polling suggests that, among all the Republican Party stances that most trouble young voters, it is the GOP’s opposition to LGBT rights that most unsettled them.
Smart Republicans, and there really are quite a few of them, recognize this reality.
That’s why the party’s LGBT wing—and, yes, there are gay and lesbian Republicans—is objecting so loudly to Mitt Romney’s morally and politically inappropriate response to Obama’s statement.
Marriage equality has captured the nation’s attention, and the response to President Obama’s announcement is evidence of the tide turning in favor of equality for all. Log Cabin Republicans have long believed that supporting the freedom to marry is the right thing to do and the president’s joining this effort is in the nation’s best interest. That said, Americans can be certain that the president would not have made this decision at this time if it were not in his best political interests. In addition to energizing his base and distracting attention from a failed economic record, the trap is laid for any Republican who responds with intolerance,” said R. Clarke Cooper, executive director of the Log Cabin Republicans. “Already some in the GOP are taking the bait with former RNC Chairman Ed Gillespie bringing up the twice-failed Federal Marriage Amendment and the unfortunate vote on Representative Heulskamp’s (R-KS) amendment re-affirming DOMA last night. Democrats are eager to fundraise off of this issue. It is in the best interests of Republican candidates to be measured and disciplined in response, recognizing that a generational shift has occurred.”
The Log Cabin Republicans are not always right.
But they are right on this issue. As Cooper says, “Governor Mitt Romney’s statement in opposition to not just marriage but civil unions jeopardizes his ability to win moderates, women and younger voters, especially as a large majority of Americans favor some form of relationship recognition for their LGBT friends and neighbors. Ultimately, the response of the Republican candidates this election cycle will determine not just endorsements by Log Cabin Republicans, but the votes of millions of Americans who are simply tired of the culture wars.”
Unlike George Romney, who embraced the future and urged his party to do the same, Mitt Romney is not just clinging to the past. He is presiding over a campaign and a party that appears to be intent on pretending that this is 1912, as opposed to 2012. That miscalculation is explains why the the Obama camp is so enthusiastically highlighting the president’s new position—and why savvy Republicans are so fretful.
By: John Nichols, The Nation, May 10, 2012
GOP leaders in Congress who can’t stop talking about family values are proposing an array of deep cuts to food stamps, child tax credits, healthcare for the poor, and even block grants that help states with daycare and adoption assistance. Left untouched are military spending that has ballooned over the last decade and tax breaks for the richest Americans. This isn’t courageous or pragmatic. It’s fiscally irresponsible and morally wrong.
Religious leaders are not letting Rep. Paul Ryan—architect of the GOP budget proposal—get away with the fiction that this budget reflects the values of his Catholic faith. The U.S. Conference of Catholic Bishops has sent a series of letters to GOP-controlled House committees arguing that these cuts are “unjustified and wrong.” Bishops wrote this week that “a just framework for future budgets cannot rely on disproportionate cuts in essential services to poor persons” and bluntly conclude that “the proposed cuts to programs in the budget reconciliation fail this basic moral test.” Catholic leaders have called for “shared sacrifice,” putting “unnecessary military spending” on the table and—in a pointed critique of Republicans’ fiscal fantasy that we can balance the budget by cuts alone—reference the need for “raising adequate revenues.” When Representative Ryan recently spoke at Georgetown University, almost 90 professors and priests at the Catholic university urged him to stop distorting Catholic social teaching to advance his radical ideological agenda. Expect faith leaders to keep challenging budget proposals and economic policies that undermine bedrock principles of justice, compassion, and the common good.
We should not pit national security against economic security. An effective military and a responsive government that doesn’t turn its back on vulnerable families are both achievable if we move beyond false choices. The working poor struggling in minimum-wage jobs, the elderly, and a squeezed middle class did not cause our deficits. They should not be asked to bear the greatest burden.
By: John Gehring, Washington Whispers Debate Club, U. S. News and World Report, May 10, 2012