Why JP Morgan Gets Away With Bad Bets

By William K. Black
(Written for CNN Opinion)

JPMorgan Chase can be considered a systemically dangerous institution, which means that it is “too big to fail” because the government fears that its collapse would cause a global financial crisis.

It is simply irrational to allow such an institution to exist, especially when it can easily incur a $2 billion trading loss.

Banks are more efficient when shrunk to the point that they can no longer endanger the world economy. But because JPMorgan and similar banks are the leading contributors to Democrats and Republicans, neither political party has the courage to order them to reform.

The Volcker Rule, which aims to prevent insured banks from engaging in speculative bets, was passed as part of the Dodd-Frank Act over the objections of Treasury Secretary Timothy Geithner and almost the entire Republican congressional delegation.

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2 responses to “Why JP Morgan Gets Away With Bad Bets

  1. Herbert Spencer said “The ultimate result of shielding men from the effects of folly is to fill the world with fools.”

    If the shareholders, depositors and customers of JP Morgan Chase, et al, cannot see that they are being ripped off and act to simply divest themselves from these firms, how can they possibly be expected to vote for proper legislative reform? Isn’t there a giant logical gap in that thinking?

    Where are the benevolent, all-knowing dictators going to come from? They would be historically unprecedented.

    If people have forgotten how to cross the street, are we to put crossing guards at every intersection to assist them? Where does it end?

    That $2 billion loss, by the way, will prove to be a massive hole in the Volcker Rule — before it’s even in effect! — just another in a long line of McCain-Feingolds. And what do you think we will pay in government salaries just to get that utterly useless series of rulings a few years from now?

  2. Professor Black, much respect and thank you endlessly Sir.

    You will never know how much you have influenced the world.