The Senate Banking committee started hearings on the recent problems at JP Morgan (which even Mornan’s chairman said were “sloppy” and “stupid” and would increase the pressure for additional regulation). But thanks to generous donations of campaign cash, the hearing got turned into a circus. Committee members weren’t about to actually, you know, investigate any possible problems at JP Morgan. Instead, they were more interested in blaming government regulations for the problems, especially the recent Dodd-Frank bill.
Richard Shelby (R-AL) grilled the regulators, mocking them repeatedly for not knowing in advance what was going on at JP Morgan. (JP Morgan contributed $72,950 to Senator Shelby, making them his second largest source of campaign money).
Bob Corker (R-TN) predicted “the American people are going to wake up” and realize “this Dodd-Frank bill really doesn’t address real-time issues.” (Corker received $61,000, making JP Morgan his largest source of money).
Mike Johanns (R-NE) complained that “regulations become more and more onerous.”
Pat Toomey (R-PA) declared that “we’ve gone down the wrong road” with Dodd-Frank.
There’s just one problem with these statements. The part of Dodd-Frank that would have prevented what happened at JP Morgan is the “Volcker rule“, which attempts to separate speculation and monetary gambling from their government-backed deposits, similarly to the Glass-Steagall law that was repealed in 1999. And the Volcker rule hasn’t been implemented yet, mainly because of Republican efforts to water it down through exemptions and by defunding it.
So the Republicans are trying to abort the Volcker rule before it is even implemented, by blaming it instead of the bankers who actually caused the problem. And even though SEC chairman Mary Schapiro testified that JP Morgan would have been more easily monitored “if the Dodd-Frank rules had been in place.”
But the most ironic thing was Toomey’s solution to the problem. He wants to “let the people in the marketplace make the decisions they will make.”
Yeah, that’s what caused the great recession in 2008. I guess the Republicans like to think of that as the good old days.
3 Comments
I think part of the problem is a misunderstanding of the markets. By politicians and the general public.
I’ve heard from one source (can’t remember where, believe it was a politician) that the $2B oopsie JPMorgan lost was a gain for someone else, hence free market magic blah blah blah. I don’t care enough anymore about the specifics of the financial circus to look into exactly how they lost the money, but in many cases these investments are not zero sum games where one loser makes another a winner. It isn’t as if the money gets lost gambling in a casino, so at least it went into the pocket of some Americans. It is absolutely possible to lose billions (or trillions) of dollars into nothingness. It is literally like you took trucks full of cash and set them on fire. The only net gain is ash into the atmosphere.
Were it just a question of a single financial institution, I would agree with who cares. Ignoring the idea that they are gambling with money that they shouldn’t be, the problem is that were these large firms to actually evaporate, the chasm left in the economy would be like a black hole, sucking in everything else behind them. This is why the bailouts were necessary.
But still I heard back then and I still hear now this mantra of ‘let them fail.’ Let them fail now and we’ll have just a short bit of badness followed by a miraculous recovery and years of red white and blue prosperity. They don’t understand that the little bit of badness is more than likely total economic devastation which we can never recover from.
I think people like Ron Paul truly believe ‘every institution for themselves’ is a good thing, which is terrifying. But I believe firmly that many Republicans are saying these things simply for their own personal gain…which is immensely more terrifying! They are not all stupid people. Most of them have to understand economic issues on a large scale. Imagine someone who is willing to literally destroy everything around them just for the chance at more money, more power, more success.
And these are the adults we’ve elected to run the show. These are the people begging to let the market destroy America.
Crazy.
Romney is the one who claimed that the loss is a gain for someone else.
http://bangordailynews.com/2012/05/18/business/jpmorgan-trading-loss-throws-republican-lawmakers-off-balance/
Yep, that’s it. I didn’t remember it being Romney, but this is a perfect example of what I’m talking about.
Romney was part of Bain, a private equity firm. He’s an intelligent guy. He FULLY understands the investment markets. But he has no qualms lying about this because he thinks it gets him closer to the presidency.