A month ago when this story started to surface, JP Morgan Chase CEO Jamie Dimon called it a "tempest in a teapot." Now he calls the trading strategy employed "sloppy” and “stupid." Which is it? Or, in fact, does CEO Dimon even know what goes on in his "too-big-to-fail" bank?
Should CEO Dimon be escorted out of JPMC along with his "sloppy” and “stupid" traders and risk-management execs? I'll leave that to the shareholders and board of directors. But, at a minimum, CEO Dimon should resign from the NY Fed if not from JPMC as well.
One would think after the fiasco of the 2007-2008 financial crisis, the too-big-to-fail (“TBTF”) banks would have learned a lesson about risk management --- but, no, here we are again with JP Morgan Chase losing $2+ billion of their "own" money --- and under the leadership of CEO Dimon who is one of those most vocal against limiting the banks' proprietary trading under proposed legislation. (As an aside, the TBTF banks of vintage 2007-2008, including JPMC, are now even bigger than they were at the beginning of the financial crisis.)
The shareholders, bondholders and managements of these TBTF banks should pay the price for "mistakes" such as JP Morgan Chase's recent fiasco. However, the US taxpayer remains on the hook just as in the 2007-2008 financial crisis.
Banks have been granted their "franchises" and given preferential treatment to serve the needs of the nation's economy and to facilitate the movement of funds between individuals/entities wanting to have a relatively safe haven for their excess liquidity (aka, depositors) and those needing to borrow those resources. Proprietary trading of the TBTF banks’ "own" funds has little place in this economic environment --- the portion of those funds srepresenting retained earnings hould be distributed to the shareholders who can then choose to invest in riskier asset classes under their own decision regimens. If hedge fund investments are what they want, then let them make conscious decisions to invest in hedge funds, without any Federal (US taxpayer) guarantee of the investment. Any other "excess" funds (representing depositors' monies) should be invested in safe assets (e.g., US Treasury bills/bonds) until theOne would think after the fiasco of the 2007-2008 financial crisis, the too-big-to-fail (“TBTF”) banks would have learned a lesson about risk management --- but, no, here we are again with JP Morgan Chase losing $2+ billion of their "own" money --- and under the leadership of CEO Dimon who is one of those most vocal against limiting the banks' proprietary trading under proposed legislation. (As an aside, the TBTF banks of vintage 2007-2008, including JPMC, are now even bigger than they were at the beginning of the financial crisis.)
The shareholders, bondholders and managements of these TBTF banks should pay the price for "mistakes" such as JP Morgan Chase's recent fiasco. However, the US taxpayer remains on the hook just as in the 2007-2008 financial crisis.
Banks have been granted their "franchises" and given preferential treatment to serve the needs of the nation's economy and to facilitate the movement of funds between individuals/entities wanting to have a relatively safe haven for their excess liquidity (aka, depositors) and those needing to borrow those resources. Proprietary trading of the TBTF banks’ "own" funds has little place in this economic environment --- the portion of those funds srepresenting retained earnings hould be distributed to the shareholders who can then choose to invest in riskier asset classes under their own decision regimens. If hedge fund investments are what they want, then let them make conscious decisions to invest in hedge funds, without any Federal (US taxpayer) guarantee of the investment. Any other "excess" funds (representing depositors' monies) should be invested in safe assets (e.g., US Treasury bills/bonds) until they can be deployed into lending activities.
This approach would take much of the burden off US taxpayers to correct the " sloppy” and “stupid" decisions (CEO Dimon’s own adjectives) that have been made by the TBTF banks in the post-Glass-Steagall era.
y can be deployed into lending activities.
This approach would take much of the burden off US taxpayers to correct the " sloppy” and “stupid" decisions (CEO Dimon’s own adjectives) that have been made by the TBTF banks in the post-Glass-Steagall era.
