Question for the day: Is Mittens still criticizing Dodd-Frank this morning?

[devil-ad-vocate.livejournal.com]

http://www.businessweek.com/articles/2012-05-11/jpmorgans-big-loss-volckers-not-so-dumb-after-all

JPMorgan CEO Jamie Dimon went out on a limb in saying that he knew more about financial markets than Volcker, the former Federal Reserve chairman who championed the rule restricting banks’ trading risks.

“Paul Volcker by his own admission has said he doesn’t understand capital markets,” Dimon told Fox Business earlier this year. “He has proven that to me.”

Now it’s Dimon who looks like he doesn’t understand capital markets. Bloomberg News is reporting today that the loss occurred after traders in the London-based chief investment office changed a key betting strategy. “Dimon wasn’t immediately told about their shift in strategy and didn’t know the magnitude of the losses until after the company reported earnings April 13,” an executive told Bloomberg.

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Before the Volcker rule even had a chance to go into effect, here's a good argument for dumping it in favor of restoring Glass-Steagall. These monster banks are not a solution - they are the problem. If someone can convince me that Las Vegas isn't a better place for my money, I'd like to hear it.

What's your take on this?

Comments

[fierceleaf.livejournal.com]

Bloomberg News is reporting today that the loss occurred after traders in the London-based chief investment office changed a key betting strategy

Don't they ought to have the kind of an automatic messaging system to notify officials about such important events? That was a systems error?

[devil-ad-vocate.livejournal.com]

At this time, they don't seem to know exactly what happened... or they don't want anyone to find out.

[the-rukh.livejournal.com]

The linked article says a big issue is individual investors make a point to not notify higher-ups often because they know the higher-up who actually has some responsibility would probably deny their bet. They make commission either way so that's the last thing they want. And even though many people know that was happening, Dimon was turning a blind eye to it because OMG regulation

[devil-ad-vocate.livejournal.com]

Bruno Michel Iksil, a London trader nicknamed "Voldemort", is suspected of taking huge, risky trades for the bank.

[pastorlenny.livejournal.com]

Megabank capitalists are a lot like megachurch pastors. They know how to get to the top -- but they don't understand what it is that they are on top of.

[squidb0i.livejournal.com]

Oh hells yes.

[rimpala.livejournal.com]

Nomination for Daily Quote!

[ironhawke.livejournal.com]

Ted Haggard sure knew all about being on top.....

[dwer.livejournal.com]

wait! I thought we were supposed to trust in the market! WHAT'S THE INVISIBLE HAND DOING TO THAT MAN???

[gunslnger.livejournal.com]

Investment banks aren't the market.

[mrbogey.livejournal.com]

What free hand? The market isn't that free.

I could easily mock you by asking "OMG... The govt failed to stave off an economic collapse!!! Where is your planned economy now?"

[devil-ad-vocate.livejournal.com]

Interesting back story from April 5th:

http://articles.businessinsider.com/2012-04-05/wall_street/31293137_1_credit-default-swaps-hedge-fund-traders-new-credit

...which shows Dimon knew about the extremely risky behavior before April 13th... when he said he "first learned of the magnitude of the losses".

[fizzyland.livejournal.com]

Hell, there's people in this community who think they know more about financial markets than Volcker.

[telemann.livejournal.com]

HBO's movie "Too Big To Fail" had Mr. Daimon's douch-baggery down to a tee. Time to watch it again.

[badlydrawnjeff.livejournal.com]

I'm not sure what this is proving one way or the other. JPM makes bad call, JPM pays.

[the-rukh.livejournal.com]

Lets put it like this. If a guy says "People should listen to me! I'm smart and know things!" And then something he controls fails badly specifically because of the very same advice he gave... would you say, well he claims to be smart but he's so very wrong when it comes down to it, maybe the other guy is right?

[dwer.livejournal.com]

except we're supposed to trust them to not need regulation. In this case, it was a hedge fund, but we've all seen cases where they've lost their clients' money, and who paid for it then, hmmm?

[pastorlenny.livejournal.com]

So you actually have no idea what JP Morgan does.

[mikeyxw.livejournal.com]

I'm missing the comparison as well. JPM makes a lot of very large investments, some will go wrong, some will go right. Paul Volcker does not make any and therefore none will never see losses in the billions. Does this prove Paul Volcker knows better than JPM's CEO? A single bad investment doesn't exactly make the case that there is something wrong with the system, it makes the case that some companies will be more successful than others.

[meus-ovatio.livejournal.com]

Contrary to popular belief, and ratified by the reality that no one in the top executive class knew exactly what the hell CDOs were, you don't actually have to know anything to get to be a CEO. You just have cook the books and play it off like you know what you're doing. I'm always amused by people who are still so naive as to think Management has any connection to Operations.

[fizzyland.livejournal.com]

Is there a class I can take to pick up the basics of cooking the books? CEO seems like a cushy job.

[squidb0i.livejournal.com]

B-B-BUT FREE MARKETS

[peristaltor.livejournal.com]

This back-and-forth is just plain silly.

First, the concept of a "free market" only applies to markets that are transparent enough to be evaluated by its participants. The banks lobbied hard and won the right to conceal the over-the-counter credit default swaps that butthurt JPM/C to the tune of 2 mega-mega-large.

Meaning no one could have known that JPM/C held this grenade, let alone that the pin was ready to fall.

Second, regulation need not be invasive, merely strong enough for the market to resolve such liability assessments. Get those OTC CDSs out of the dusty filing shelves and into clearing houses and the problem will eventually go the fuck away. What losses the banks suffer in the short run will be made up by increased market stability in the long.

[kylinrouge.livejournal.com]

Proponents of reducing legislation seem to have a difficult time understanding what exactly these banks do and what effects they have on the economy. They seem to believe in this vacuum where a bank's actions only affects those directly connected to it, and thus it is a simple matter to them to simply let the cards fall where they may and for everyone who they perceive to be 'not involved' to be unaffected. Of course, this is not reality, hell they don't even have to look that far back to see how big of an effect on the economy these banks have, just look at 2008!

The fact is, the business the banks engage in affect the market at large because we have allowed them to do anything and everything with money due to our lower regulation. We have bank tellers telling you to put your money in their bank while they themselves put their money with a credit union, because they understand what's going on. Our inter-connected market and the credit that we can grow exponentially due to fractional reserve banking allows for huge amounts of wealth to be created in a such time, but also huge amounts to be destroyed in a short time. People speculate on that wealth continuing to grow and bet on it, and then when it all disappears they lose their bet, and in 2008, their houses.

[fornikate.livejournal.com]

late, but A+