Are the Too Big To Fail Banks too dumb to learn? Yesterday's $2 billion trading loss by JPMorgan Chase shows that big banks continue the same risky behavior that led to the U.S. financial crisis in 2008.
Big banks don't need regulation, claims CEO Jamie Dimon, who continues to insist there is no need for the Volcker Rule, which would ban big banks from risky trading, according to The Atlantic magazine.
At least Dimon was smart enough to take his $17 million pay package of stock shares last January.
In all, five U.S. banks remain large enough to crash the U.S. economy, the Atlantic story notes: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs now make up more than half of the U.S. economy, with $8.5 trillion in assets last year. Before the financial crisis, big bank holdings totalled 43 percent of U.S. output, and they just keep growing.
They have doubled in size in the past 10 years, and are still big enough to both crash the economy and demand another government bailout, such as 2008's Toxic Assets Relief Program (TARP). Chase also benefited from the bankruptcy of Bears-Stearns that year, when the Federal Reserve guaranteed it would pay Chase's $2-per-share buyout price, which some financial industry critics called a sweetheart deal amounting to a $12 billion windfall for Chase stockholders.
The financial crisis wiped out retirement and investment funds for many middle class families, but few regulators have even investigated banks for financial wrong doing, and banks tend to ignore investigators. The big banks also stifle competition from about 20 regional and 7,000 community banks across the nation.
Isn't it time to investigate these banks, to regulate them properly, or to just break them up?
What do you think?