Mixed Messages From Capitol Hill on J.P. Morgan Loss
Last edited Thu May 17, 2012, 07:14 PM - Edit history (1)
The more than $2 billion trading loss disclosed last week by J.P. Morgan Chase & Co. is playing into the hands of Democrats in Congress such as Sen. Carl Levin (D., Mich.) and Jeff Merkley (D., Ore.) who are calling for stricter regulation of financial firms and a tough Volcker Rule to limit banks’ trading activities.
Other lawmakers, meanwhile, have been saying distinctly different things. Some are effectively saying “no big deal,” noting that J.P. Morgan is likely to emerge from the trading loss unscathed.
Others are calling for more aggressive scrutiny — both of banks’ trading activities and of regulators’ ability to monitor those activities.
These views reflect a fundamental uncertainty about what do to about large banks that are “Too Big To Fail.”
Calls to break up the largest banks have been growing of late, with Dallas Federal Reserve President Richard W. Fisher and Federal Reserve Bank of St. Louis President James Bullard saying that banks deemed “too big to fail” should be broken up or downsized. Many analysts, meanwhile, say these calls to break up the nation’s largest financial institutions could well gain currency on Capitol Hill.
Here’s a sampling of views from a few key members of the House Financial Services Committee:
http://blogs.wsj.com/economics/2012/05/17/mixed-messages-from-capitol-hill-on-j-p-morgan-loss/?
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