According to JPMorgan Chase CEO Jamie Dimon, the recovery has stalled because of strict banking regulation.
I’m not making this up.
At a financial conference today, Dimon told Fed chief Ben Bernanke there’s no longer any reason to crack down on Wall Street. “Most of the bad actors are gone,” he said. “[O]ff-balance-sheet businesses are virtually obliterated, … money market funds are far more transparent” and “most very exotic derivatives are gone.”
Dimon said he worried that financial reform legislation is “holding us back at this point” from a stronger economy.
Someone should remind Dimon that a few years ago, before any stricter regulation or oversight went into effect, he and his colleagues on the Street almost eviscerated the American economy. Remember, Jamie? The Street’s antics required a giant taxpayer-funded bailout.
JPMorgan Chase and the other giant banks on Wall Street are bigger than they were before. And now they’re certain they’re too big to fail. Without far stricter regulation they have every incentive to repeat their binge.
Dimon believes most of the bad actors are gone. To the contrary, none of the truly bad actors has been prosecuted. In fact, most are making more money than ever before.
Off budget businesses obliterated? Funds more transparent? Exotic derivatives gone? Dimon still doesn’t get it. The only reason there’s been any progress at all to date is because rules have been tightened and regulators are more vigilant. But at this very moment the banks — including JPMorgan Chase — are lobbying heavily to relax the rules so they can return to their old ways.
The recovery has stalled because most Americans are still in the gravitational pull of the recession — unable and unwilling to buy enough to keep the economy going. And that’s largely because the terrible consequences of what Dimon et al did to the economy are still being felt by most Americans.
On what planet has Jamie Dimon been living?
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Dimon raises my hackles too, but it’s not entirely out of the realm, Bob. And the last thing we should be doing in a balance-sheet recession is raising capital requirements (read your Geanakoplos if you really call yourself an economist…).
But how deliciously ironic of you to write about this!!! Let’s see…whose boss signed most of the legislation that did away with sensible limits on financial institutions, paid *ZERO* attention to issues of systemic fragility, and made the 2008 financial crisis possible? Oh, right! Yours!!!!!! And whose people told Brooksley Born to stop being such a little Hyman Minsky and go pound sand??? Oh yeah, that’s right!!!! It was YOUR people!!!! You know, the party of the working class. And Bob Rubin.
You should all be in jail. Or at least somewhere where no one can hear you.
An article by a “political economist, professor, author, and political commentator.” and former Secretary of Labor posted June 8 and by July 4 only one commment. Why is nobody reading this and commenting?
Well, it is obvious why no one is reading this – it is total nonsense.
1. “Why the recovery has stalled?” Recovery? What recovery? There is no, and has been no, recovery. A so-called end of recession does not mean a recovery. End of recession merely means the economy is no onger falling. But there has been no recovery. What planet has he been living on?
2. “… none of the truly bad actors has been prosecuted. In fact, most are making more money than ever before.” How true, why aren’t Barney Frank, Andrew Cuomo, Franklin D Raines and others in the federal government in jail?
3. ” …a few years ago, before any stricter regulation or oversight went into effect, he and his colleagues on the Street almost eviscerated the American economy.? First, how about some facts to support that claim. Not a whole book, just a few facts. Second, what on earth does that statement say? ANY time is a time “before stricter regulation or oversight went into effect.”
If (nay, when) they come up with stricter and more burdensome regulations as a result of Dodd-Frank, as they intend to, then won’t today be a time “a few years ago, before any stricter regulation or oversight went into effect…”
This is not to deny that the financial institutions did not have a role in the current financial mess, they clearly did. But let’s look at the real culprits – federal laws, the Federal Reserve, Fannie and Freddy and a Congress that wanted to bury its head in the sand.
All of this curfuffle over “exotic derivatives” conveniently ignores one very vital fact. If people had continued to pay off their mortgages and other debts they owed then there would not have been, and would not be, a problem with derivatives and off-balance sheet deals or any other financial structures. Those are not the root cause of the current problem.
Reich, what planet are you living on?