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JP Morgan’s Trading Debacle Is Just ‘The Way America Works’

Posted by on May. 17, 2012 at 3:27 PM
  • 8 Replies

Romney Says JP Morgan’s Trading Debacle Is Just ‘The Way America Works’

JP Morgan’s $2 billion trading debacle has grown into a $3 billion trading debacle, as the White House is going on offense to push regulators to craft a stronger version of the Volcker Rule, which is meant to rein in banks’ risky trading. Even House Republicans have backed off their deregulatory zeal for the moment, in the wake of JP Morgan’s mess.

Presumptive 2012 Republican presidential nominee Mitt Romney, however, said that the loss is simply “the way America works,” and said that it doesn’t make the case for enhancing any regulations:

In his first direct comments on the bank’s missteps, Romney said, “I would not rush to pass new legislation or new regulation.” [...]

“This was not a loss to the taxpayers of America; this was a loss to shareholders and owners of JPMorgan and that’s the way America works,” he said. “The $2 billion JPMorgan lost, someone else gained.” [...]

While Romney supported the federal bailout of the banking system, known as the Troubled Asset Relief Program, he said in yesterday’s interview that the economic climate has changed and banks now should be allowed to fail.

“My own view is that if a large bank gets in difficulty, why, it can fail,” he said.“There’s no reason why the shareholders or bondholders of a bank can’t lose their funds if a bank were to get in trouble.”

Romney, in his hurry to decry regulations, misses the key point: risky bank trading is not the embodiment of capitalism if the government needs to step in and rescue a giant firm that fails. While JP Morgan survived this particular trade, there’s no telling what would happen to a bank in worse financial shape that took a similar risk. And the episode highlights that the biggest banks — which, contrary to Romney, can’t simply fail, as they could haul down the whole economy down with them — are still ready and willing to take absurd risks with taxpayer backed dollars. And Romney is happy to see them do so.

Of course, this is just part and parcel of Romney’s fealty to Wall Street interests. He has shown no interest in correcting the gaps in oversight that contributed to the 2008 financial crisis, instead promising to repeal Dodd-Frank, while laying out no alternative.

http://thinkprogress.org/economy/2012/05/17/485760/romney-jp-morgan-regulation/

by on May. 17, 2012 at 3:27 PM
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Replies (1-8):
itsmesteph11
by on May. 17, 2012 at 3:37 PM
3 moms liked this

 He is right.  There is no risk to taxpayers.  If you want to blame anyone, blame the FED for handing out the easy money.  It was stupid of them to think these banks and morgage companies were really going to "make loans" with it.   They made a bet and they lost. This can be taken care of IN HOUSE. If share holders want to sue then they can. (and some are). That is how it works!   There is nothing hindering our growth worse than the new and hugely ridiculous restrictions that affect the jobs AND the housing markets

Meadowchik
by Gold Member on May. 17, 2012 at 4:22 PM

 From the WSJ:

Mitt Romney cautioned that J.P. Morgan’s $2 billion loss shouldn’t inspire a rush for new legislation or regulation in an interview with a conservative blogger Wednesday.

Mr. Romney said the company and regulators should investigate the loss to understand what happened. But he pointed out the loss was borne by the shareholders and owners of J.P. Morgan, not the American taxpayers.

“That’s the way…America works,” Mr. Romney said in a radio interview with Ed Morrissey. “Some people experienced a loss in this case because of a bad decision. By the way, there was someone who made a gain, all right. The $2 billion J.P. Morgan lost someone else gained.” (The J.P. Morgan discussion starts about three minutes into the interview above.)

The likely Republican nominee said J.P. Morgan’s struggles differed from the problems banks faced in 2008 because the issue isn’t widespread and taxpayer dollars aren’t on the hook.

“I would not rush to pass new legislation or new regulation,” Mr. Romney said. “This is, in the normal course of business, a large loss but certainly not one which is crippling or threatening to the institution.”

http://blogs.wsj.com/washwire/2012/05/16/romney-j-p-morgans-2-billion-loss-is-someone-elses-gain/

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Della529
by Bronze Member on May. 17, 2012 at 5:51 PM

 Hmmm. 

jlo1313
by Bronze Member on May. 18, 2012 at 1:57 PM

 I agree 110% with this.  As a shareholder and investor, risks are taken daily and you have to watch the business closely.  Management answers to its shareholders.  When business practices are bad, it is up to the shareholders to vote management out and management is supposed to practice good ethics. Unfortunately when salaries get too high, people will do anything to keep those ridiculous incomes and not all the cards are out on the table.  And when government has mislead many companies or aided them under the table trying to hide the true nature of the economy...we end up with a mess like October 2008.  

I would be very unhappy to see more legislation passed at this point.  I think businesses and government need to look at this whole thing for what it really is, a wake up call and time to get real.  Those that are doing well should be free to flourish and those that are not, its time to clean up or get the hell out.  It is not up to the taxpayers to continue to bail them out or keep them in business and it is not up to the government to put even more regulations in place that trickle down to smaller businesses trying to grow to suffer while the problem businesses float above the laws. 

Quoting itsmesteph11:

 He is right.  There is no risk to taxpayers.  If you want to blame anyone, blame the FED for handing out the easy money.  It was stupid of them to think these banks and morgage companies were really going to "make loans" with it.   They made a bet and they lost. This can be taken care of IN HOUSE. If share holders want to sue then they can. (and some are). That is how it works!   There is nothing hindering our growth worse than the new and hugely ridiculous restrictions that affect the jobs AND the housing markets

 


NancSBRN
by Bronze Member on May. 18, 2012 at 10:07 PM


The defintion of insanity is doing the same things over and over and expecting a different result. JP Morgan Chase would do well to remember that.

There was  a day when banks had rules and making stupid bets against their own bad products where not one of them.

I hope they vote out that CEO.

29again
by Gold Member on May. 18, 2012 at 11:53 PM


Quoting NancSBRN:


The defintion of insanity is doing the same things over and over and expecting a different result. JP Morgan Chase would do well to remember that.

There was  a day when banks had rules and making stupid bets against their own bad products where not one of them.

I hope they vote out that CEO.

There were days when banks were banks, and investment houses were investment houses.  Today, they are one & the same.  Which is why I do not patronize the monster mega-banks like Chase.     And Jamie Dimon still has his job.  Shocker, right?

Ginacoolidge
by on May. 19, 2012 at 2:29 AM

Rather than just regurgitating a story from the far-left ThinkProgress, why not tell us what YOUR views are?

  • Does the federal government need to keep you from making investments in JP Morgan?  
  • Must the government guarantee that you won't lose money, even if you chose to make a high-risk investment?  
  • Was this incident an example of the way things should work? - Make a risky investment, and you may lose your shirt.  
  • Will we be better off with government deciding what is a good investment, and what is bad?
  • Should the government stop you from investing your money in JP Morgan?  Should it force you to invest in Solyndra?
Meadowchik
by Gold Member on May. 19, 2012 at 3:16 AM

Some people I know just lost a total of more than 200K from a startup investment.  The product is promising, but their problem was with who owned the patent.  They lost, but someone else won.  It was their choice, and unfortunately, it really sucks right now...that is the nature of investments, especially high-yield investments.

Quoting Ginacoolidge:

Rather than just regurgitating a story from the far-left ThinkProgress, why not tell us what YOUR views are?

  • Does the federal government need to keep you from making investments in JP Morgan?  
  • Must the government guarantee that you won't lose money, even if you chose to make a high-risk investment?  
  • Was this incident an example of the way things should work? - Make a risky investment, and you may lose your shirt.  
  • Will we be better off with government deciding what is a good investment, and what is bad?
  • Should the government stop you from investing your money in JP Morgan?  Should it force you to invest in Solyndra?

 

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