Editor’s Note: Each week we cross-post an excerpt from Katrina vanden Heuvel’s column at the WashingtonPost.com. Read the full text of Katrina’s column here.
Consider $2 billion lost on a bad bet, plus billions more as investors dumped the stock, a providential warning. When Jamie Dimon, the imperious head of JPMorgan Chase, revealed that the bank had lost so much on a derivatives trade gone bad, it was clear warning that, four years after blowing up the economy, the big banks are still playing with bombs.
This was no rogue trader. Dimon admitted to “many errors, sloppiness, bad judgment” in “poorly executed” derivative trades. Heads may roll, but these were authorized trades by the bank’s leading—and notorious—trader, Bruno Iksil, the “London Whale.”
Dimon, of course, has been Wall Street’s most vociferous critic of banking reforms, deploying an army of lawyers and lobbyists—at the cost of an estimated $7.4 million in 2010— to try to delay, dilute and disembowel the Dodd-Frank legislation. The unrelenting legal and lobbying campaign has clearly intimidated the regulators, forcing delays beyond the dates mandated by the statute. Most recently, the bank lobby seemed on the verge of defenestrating the Volcker Rule, which would limit commercial banks from gambling with depositors’ money. That rule, itself a pale shadow of the Glass-Steagall Act repealed during the Clinton years, might have constrained the kind of opaque, risky bets that led to the losses.
Editor’s Note: Each week we cross-post an excerpt from Katrina vanden Heuvel’s column at the WashingtonPost.com. Read the full text of Katrina’s column here.
