JPMorgan shows case for Wall Street reform – Obama

2012-05-15 07:18

US President Barack Obama said the fact that JPMorgan Chase – one of the country’s “best managed” banks – could lose $2 billion in derivatives trades, showed the need for tighter banking regulation.

Obama said in an interview on ABC television’s “The View,” to be broadcast in full today, that JPMorgan chief Jamie Dimon was “one of the smartest bankers we got and they still lost money.”

“They still lost $2 billion dollars and counting precisely because they were making bets in these derivative markets. This is why we passed Wall Street reform.

“The whole point was, even if you’re smart, you can make mistakes and since these banks are insured backed up by taxpayers, we don’t want you taking risks where eventually we might end up having to bail you out again.”

Obama argued that his Wall Street reform law that is currently being implemented had raised capital requirements so that banks could absorb losses and imposed restrictions on proprietary trading.

“Keep in mind if we get all the rules that we proposed and were passed by Congress implemented into law, it should prevent this kind of stuff from happening.”

Obama also said that the JPMorgan episode revealed a sharp difference between his approach and that of his Republican foe in November’s presidential election Mitt Romney.

Obama said the former venture capitalist and Massachusetts governor had criticised him for trying to impose too many restrictions on the banking industry and of making it harder for banks to lend to businesses.

“We’ve got real differences here,” he said.

On Thursday, JPMorgan revealed that its chief investment office racked up at least $2 billion in losses over six weeks on trading its own assets in the complex derivatives market.

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