Everyone is talking about the financial bloodbath that JP Morgan Chase is going to take this year amounting to what some report as $4 to $5 BILLION in losses from one particular bet using profits directly from the bank…not that of it’s customers; if you do not understand why this is a big deal – read HERE. Elizabeth Warren dreamed up the Consumer Financial Protection Bureau and was non-political during her time as Chairwoman of the Congressional Oversight Panel which oversaw the assets of the TARP fund (great video HERE). She has been about good governance and she has a history of being one of the few to stand up against Wall Street. She’s a modern day David v. Goliath story.
Banking should be boring. Banking should not be this kind of high risk activity. That’s what Glass-Steagall was all about.
Well – this morning…Elizabeth Warren called upon the Chairman and CEO of JP Morgan Chase – Jamie Dimon – to step down from his position on the NY Federal Reserve Bank Board. It’s a tremendous conflict of interest…and is very much akin to a “you scratch my back and I’ll scratch yours” good ol’ boy club. And she’s calling for some accountability and moving away from an environment of self-regulation.
Her campaign puts out a press release HERE:
“Wall Street banks continue to have fundamental problems, and tough oversight and accountability are urgently needed. Jamie Dimon deserves credit for taking public responsibility for $2 billion in losses based on a trading strategy he called ‘poorly reviewed,’ ‘poorly monitored,’ and even ‘sloppy.’ But Dimon is not only the CEO of JP Morgan, he is also a member of the Board of Directors of the New York Federal Reserve Bank, where he advises the Federal Reserve on the oversight of the financial industry,” Warren said.
“After the biggest financial crisis in generations, the American people are frustrated that Wall Street has still not been held accountable and does not appear to consider itself responsible. Dimon should resign from his post at the New York Fed to send a signal to the American people that Wall Street bankers get it and to show that they understand the need for responsibility and accountability,” Warren said.
Ezra Klein interviews Elizabeth Warren HERE - an excerpt:
EK: That gets us to the Volcker rule, which is what would keep banks that get that guarantee from gambling with customer money and a federal backstop. But at this point, I don’t think very many people — even people who follow this stuff quite closely — have a very specific sense of what the difference between a good and bad Volcker rule is. So how do you think about that?
EW: I’m going to reframe it slightly: Who profits from the complexity of the Volcker rule? It’s the largest financial institutions. No financial institutions want a simple Volcker rule. They want layers and layers of complexity because it’s in complexity that there are loopholes. That’s where it’s possible to back up regulators who are not quite certain about the ground they stand on. And it’s a larger problem with our regulatory structure: Complexity favors those who can hire armies of lobbyists and lawyers. The big push I made at the Consumer Financial Protection Bureau was simple rules. Simple mortgage documents. Simple credit card agreements. Because complexity creates too many opportunities for an army of lawyers to turn the rules upside down.
You can read more about the details of what actually happened with JP Morgan Chase’s big, bad bet HERE.
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