Barney Frank to JP Morgan: I told you so
Friday, May 11, 2012
U.S. Rep. Barney Frank says word that JPMorgan Chase lost $2 billion on derivatives trades deflates the firm’s opposition to the Dodd-Frank financial-reform bill the Newton Democrat championed.
“This regrettable news from JPMorgan Chase obviously goes counter to the bank’s narrative blaming excessive regulation for the woes of financial institutions,” Frank said today after JPMorgan Chase disclosed that its London office lost $2 billion on speculative investments.
“The argument that financial institutions do not need the new rules to help them avoid the irresponsible actions that led to the crisis of 2008 is at least $2 billion harder to make today,” the congressman said.
JPMorgan CEO Jamie Dimon, who disclosed the losses yesterday, had been leading Wall Street’s opposition to the Dodd-Frank law — which passed in 2010, but hasn’t been fully implemented.
The new law’s so-called “Volcker Rule,” named after proponent and former Federal Reserve chief Paul Volcker, would limit big banks’ abilities to participate in highly risky trades.
However, the Volcker Rule won’t take effect until 2014 and it’s not clear whether the measure would have banned JPMorgan’s derivatives investments.
Still, Frank noted that JPMorgan has previously claimed complying with Dodd-Frank would cost $400 million to $600 million — a pittance compared to what the bank just lost.
“In other words, JP Morgan Chase — entirely without any help from the government — has lost in this one set of transactions five times the amount they claim financial regulation is costing them,” Frank said.
http://www.bostonherald.com/business/general/view.bg?articleid=1061130970
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