Paul Volcker Tells JPMorgan To Give Up Commercial Bank Status If They Want To Gamble. What Difference Would That Make?

May 17, 2012

As you should already know, JPMorgan CEO Jamie Dimon recently announced that his bank lost $2 billion gambling on derivatives; the same instruments that brought down the world’s financial system in 2008. There were some who suggested the losses would go beyond that amount and it has: It is now up to $3 billion. Paul Volcker, father of the “Volcker Rule”, which, if implemented, would curtail commercial banks from gambling, says to Dimon “give up [your] banking license” and gamble all you want (video below).

But that won’t work!

During the initial fallout of the 2008 crisis, Goldman Sachs and Morgan Stanley, which were investment banks, successfully lobbied then-Secretary of Treasury Henry Paulson (ex-CEO of Goldman) and the Federal Reserve to let them become commercial banks. That action meant they were then entitled to taxpayer bailout money; which is typical of the relationship between Wall Street and Washington.

So, that being the unwritten rule, what makes Volcker think the taxpayer would be off the hook if JPMorgan gave up their commercial bank status? If they go broke from gambling again, all they’ll have to do is ask their dear friends in the government to grant them commercial bank status and walla — problem solved; taxpayers to the rescue AGAIN! Privatized Profits, Socialized Losses!


lemming



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