Like an alcoholic downing nips on the drive home from court-ordered rehabilitation, JPMorgan Chase and its CEO, Jamie Dimon, could hardly wait to once again start wildly tossing depositors' money into derivative hedge bets — the very type of irresponsible behavior that nearly brought down all of Wall Street less than four years ago.
This time, the crash at the end of JP Morgan's drunken spree did far less damage — $2 billion in trading losses, a sum the insanely profitable money-changers can apparently absorb without affecting Dimon's $23 million annual compensation package, which was approved at Tuesday's shareholder meeting. (Dimon conveniently waited to disclose the fiasco until after many of JPMorgan's shareholders had put their votes in the mail.)
The JPMorgan story provides stark evidence — not that any was needed — that the federal government must continue strengthening its regulation and oversight of the banking industry.
Far from having solved the "too big to fail" dilemma, which required massive governmental intervention to prop up the nation's largest banks in 2008 and 2009, those financial institutions have only grown larger. If they were too big to fail a few years ago, then the banks today are even more capable of destroying the nation's economy. Had JPMorgan's losses multiplied we, the public, would have been on the hook again — and at this point we don't know how close the company's "errors, sloppiness, and bad judgment" took it toward that brink.
As Elizabeth Warren put it to Washington Post writer Ezra Klein: "What if the next loss is $20 billion or $200 billion? Is [Dimon] saying JPMorgan should be entitled to continue to take these bets right up until the day it lands in the taxpayer's lap again?"
Yes, he is — which is precisely why we need more US senators with Warren's sense of outrage in Washington.
Warren is calling for a strengthening of the Dodd-Frank Act, to ensure that government regulators have the flexibility and authority to keep up with the new high-wire schemes that Wall Street wizards invent to enrich themselves. That is crucially important.
She has also endorsed the idea of a new version of the Glass-Steagall Act, passed after the 1929 stock-market crash (and repealed in 1999) to separate banking institutions from high-risk investment houses. Although the specifics of how this would work are debatable, it is an idea whose time has come — yet again.
These are not measures we can expect to see from our current senator, Republican Scott Brown, who has been drumming up big-money contributions from Wall Street executives, including those at JPMorgan, by explicitly contrasting himself against a Wall Street regulator like Warren.
Although Brown has been conspicuously silent on the JPMorgan disaster, it's safe to assume that he is on the same page with his party's new leader, Mitt Romney, who derides any criticism of JPMorgan, or talk of regulation, as an attack on capitalism.
And those two represent the relatively moderate wing of today's every-raider-for-himself Republican Party. Let's not put them behind the wheel again.
MITT WANTS YOUR LUNCH MONEY
