Big trouble at Diamond Jamie's casino
May 15, 2012
THE BIGGEST bank in the U.S. blew billions of dollars on an investment strategy its chief executive called "stupid." But the loss won't make the slightest dent in the banksters' vast reserves of arrogance and greed.
JPMorgan Chase announced last week that a massive gamble made by a top trader in London went bad, costing the bank $2.3 billion in losses so far, with as much as $1 billion more still at risk. Several executives have been fired, and more may walk the plank--maybe even JPMorgan's insufferably smug CEO Jamie Dimon.
The bank's multibillion-dollar blunder came in the derivatives market--the esoteric and complex investment vehicles, far removed from the real economy, that were at the heart of the 2008 financial meltdown and helped detonate the Great Recession.
Casino capitalism is back in style on Wall Street--not that it was ever really out of style. And the banksters are gambling not only with money from depositors and big investors, such as pension funds, but with taxpayer dollars--the trillions injected into the financial system by the Federal Reserve under a variety of programs designed to bolster the banks.
Derivatives trading was supposed to come under greater regulation because of the Dodd-Frank financial reform law, named after its chief sponsors, Sen. Christopher Dodd and Rep. Barney Frank, and passed by Congress in 2010. In particular, the so-called "Volcker rule" is supposed to bar banks from "proprietary trading"--that is, gambling for their own profit rather than for customers.
But big parts of the law haven't even come into effect. The "Volcker rule" doesn't exist yet, because federal officials are still finalizing its provisions--under furious pressure from Wall Street lobbyists who want to poke as many loopholes in it as possible.
Financial commentators are divided about whether a fully implemented Dodd-Frank would have applied to the JPMorgan trades that went so disastrously bad.
But we know for sure that the law won't stop the greater crime--that the bankers can gamble with untold billions of dollars that ought to be used for the good of society, knowing that they'll get even more obscenely rich if they bet right, and they'll get bailed out if they bet wrong.
http://socialistworker.org/2012/05/15/trouble-at-the-jpmorgan-casino
