Evans Liberal Politics
May 15, 2012
The Best in Truthful Liberal News
And US Politics
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How J.P. Morgan Chase HasMade
the Case for Breaking Up The Big Banks
and Resurrecting Glass-Steagall
How J.P. Morgan Chase Has Made the Case for Breaking Up The Big Banks and Resurrecting Glass-Steagall, Robert Reich.org, May 10, 2012, by Robert Reich: Evans Liberal Politics wishes to thank Professor Reich for permission to publish his articles on an ongoing basis:
J.P. Morgan Chase & Co., the nation’s largest bank, whose chief executive, Jamie Dimon, has led Wall Street’s war against regulation, announced Thursday it had lost $2 billion in trades over the past six weeks and could face an additional $1 billion of losses, due to excessively risky bets.
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The bets were “poorly executed” and “poorly monitored,” said Dimon, a result of “many errors, “sloppiness,” and “bad judgment.” But not to worry. “We will admit it, we will fix it and move on.”
Move on? Word on the Street is that J.P. Morgan’s exposure is so large that it can’t dump these bad bets without affecting the market and losing even more money. And given its mammoth size and interlinked connections with every other financial institution, anything that shakes J.P. Morgan is likely to rock the rest of the Street.
Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).
Dimon argued that the financial system could be trusted; that the near-meltdown of 2008 was a perfect storm that would never happen again.
Since then, J.P. Morgan’s lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule — creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown.
And now — only a few years after the banking crisis that forced American taxpayers to bail out the Street, caused home values to plunge by more than 30 percent, pushed millions of homeowners underwater, threatened or diminished the savings of millions more, and sent the entire American economy hurtling into the worst downturn since the Great Depression — J.P. Morgan Chase recapitulates the whole debacle with the same kind of errors, sloppiness, bad judgment, and poorly-executed and excessively risky trades that caused the crisis in the first place.
In light of all this, Jamie Dimon’s promise that J.P. Morgan will “fix it and move on” is not reassuring.
The losses here had been mounting for at least six weeks, according to Morgan. Where was the new transparency that’s supposed to allow regulators to catch these things before they get out of hand?
Several weeks ago there were rumors about a London-based Morgan trader making huge high-stakes bets, causing excessive volatility in derivatives markets. When asked about it then, Dimon called it “a complete tempest in a teapot.” Using the same argument he has used to fend off regulation of derivatives, he told investors that “every bank has a major portfolio” and “in those portfolios you make investments that you think are wise to offset your exposures.”
Let’s hope Morgan’s losses don’t turn into another crisis of confidence and they don’t spread to the rest of the financial sector.
But let’s also stop hoping Wall Street will mend itself. What just happened at J.P. Morgan – along with its leader’s cavalier dismissal followed by lame reassurance – reveals how fragile and opaque the banking system continues to be, why Glass-Steagall must be resurrected, and why the Dallas Fed’s recent recommendation that Wall Street’s giant banks be broken up should be heeded.
Robert Reich was President Clinton’s Secretary of Labor and is Chancellor’s Professor of Public Policy at California Berkeley. Time Magazine named Prof. Reich one of the ten most effective Secretaries in U.S. history. This article is from Professor Reich’s blog and can be viewed here.
Recommended: JPMorgan Chase Has Lost $20 Billion On Its Bad Trade, Taking Into Account Share Price, HuffPost Business, May 14, 2012, by Mark Gongloff:
By now you may have heard that JPMorgan Chase lost $2 billion on a bad trade. Multiply that by 10, and you’re starting to get a better idea of how much it has really lost.
That’s because the share price of the biggest U.S. bank by assets has tumbled by more than 11 percent since it announced the trading loss, shaving about $17.5 billion from its market value. JPMorgan shares were down another 2 percent on Monday, following a 9 percent tumble on Friday.
Shareholders aren’t necessarily upset about the $2 billion loss itself. The bank has lost more money than that at different times in other businesses, the New York Times reminded us this morning, without causing much of a ruckus. Though the loss could grow to $4 billion or more, by some estimates, that’s still a far cry from the $90 billion or so in revenue the bank has raked in over the past year.
The real worry for investors is the damage the episode has done to JPMorgan’s previously sterling reputation for managing its risks, the increasing heat of the water around CEO Jamie Dimon and — maybe most importantly — the fact that this debacle comes at the worst possible time for the bank, regulation-wise.
See White House urges bank reforms after JPMorgan loss, The Raw Story, May 14, 2012, by Agence France-Presse:
Investors punished the bank’s shares again Monday, sending them 3.2 percent lower, as JPMorgan announced that chief investment officer Ina Drew was stepping down and news reports said more heads were likely to roll.
See Romney Vowing Dodd-Frank Repeal Hits JPMorgan Risky Trades (Update 1), Bloomberg, May 14, 2012, by Julie Hirschfeld Davis and Lisa Lerer:
Mitt Romney says he wants to talk about the economy in this presidential campaign, including his call to repeal the Dodd-Frank financial regulation law. JPMorgan Chase & Co. (JPM)’s $2 billion trading loss in risky transactions isn’t the sort of conversation he had in mind.
So far, presumptive Republican nominee Romney has said little about the transaction that is roiling Wall Street and Washington, prompting an inquiry by the Federal Reserve, a call for a congressional investigation and a demand by Elizabeth Warren, a Democratic Senate candidate in Massachusetts, that JPMorgan Chief Executive Officer Jamie Dimon resign from the board of the New York Federal Reserve.
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Romney, co-founder of private-equity firm Bain Capital LLC, has spotlighted his vow to repeal the Dodd-Frank law that aims to strengthen financial regulations, calling it one of several overly burdensome laws backed by President Barack Obama that costs jobs. Romney hasn’t directly commented on the JP Morgan losses since Dimon disclosed them on May 10; he ignored a reporter’s shouted question about the matter at a May 11 rally in Charlotte, North Carolina.
Also See JPMorgan Said to Weigh Bonus Clawbacks After Loss, Bloomberg, May 14, 2012, by Laura Marcinek, Donal Griffin and Dawn Kopecki:
JPMorgan Chase & Co. (JPM), the biggest U.S. bank, will consider reclaiming incentive pay from employees including former Chief Investment Officer Ina Drew after her unit had a $2 billion trading loss, said two senior executives.
The lender can cancel stock awards or demand they be repaid if an employee “engages in conduct that causes material financial or reputational harm,” JPMorgan said in its annual proxy statement. The company will claw back pay if it’s appropriate, said one of the executives, who asked not to be identified because no decisions have been made.
The incident, which led to Drew’s retirement yesterday, may test JPMorgan’s claw-back policy amid mounting investor criticism over Wall Street pay practices and as regulators investigate the trades. Chief Executive Officer Jamie Dimon said the strategy that led to the loss was “poorly executed and poorly monitored” and that it gave ammunition to proponents of stricter bank regulation.

















MN GOP lawmaker compares food stamp recipients to wild animals
Evans Liberal Politics
Sunday, March 4, 2012
The Best in Liberal Christian News
and US Politics
MN GOP lawmaker compares
food stamp recipients to wild animals
MN GOP lawmaker compares food stamp recipients to wild animals, The Raw Story, March 3, 2012, by Andrew Jones, photo courtesy of The Raw Story, Commentary by Evans Liberal Politics owner Paul Evans: Evans Liberal Politics is pleased to partner with The Raw Story to bring you cutting edge news:
One Republican lawmaker in Minnesota expressed a peculiar but existing belief in GOP circles Friday afternoon, claiming that food stamps recipients are virtually similar to feeding wild animals.
State Rep. Mary Franson released a Youtube video describing her hopes of reducing the amount of time residents in Minnesota could stay on food stamps from five years to three.
“And here, it’s kind of ironic, I’ll read you this little funny clip that we got from a friend,” she said. “It says, ‘Isn’t it ironic that the food stamp program, part of the Department of Agriculture, is pleased to be distributing the greatest amount of food stamps ever. Meanwhile, the Park Service, also part of the Department of Agriculture, asks us to please not feed the animals, because the animals may grow dependent and not learn to take care of themselves.”
Franson is not the first Republican to make this comparison. In 2010, then South Carolina Lieutenant Governor Andre Bauer said exactly the same thing.
According to the USDA, Todd County in Franson’s district contains one of Minnesota’s highest poverty rates, with 16.9 precent of residents in 2010.
Republicans and Racist Class Warfare
Commentary by Evans Liberal Politics owner Paul Evans: It would be a mistake to think of political figures such as Franson and South Carolina Lt. Gov. Andre Bauer (and others), who echo the exact same metaphor, as ignorant. (This is not quite the same thing as uneducated, is it? So for example Ms. Franson’s use of the long “a” in “agriculture” in her pronunciation in the video – twice. Is that the way they say it in Minnesota? The body of the video is actually great Republican PR.). At the level of state political figures, these people are generally very cold and calculating about public positions they take. (Democrats have to be too – it is simply what politicians have to do.)
At the national level, Republicans have, through the long-time use of political “framing” and spin — repeated over and over again — managed to convince their base, who are at least in part ordinary Americans without much political knowledge, that somehow Republicans are more Christian than are Democrats. (In reality, for example, just as many Republican lawmakers as Democrats are caught in public scandals for corruption such as influence peddling or sexual promiscuity or the use of prostitution, etc., at the state and national level. See The Record of Republican Corruption, LiberalsLikeChrist.org, no date.) In a similar process of indoctrination, they have managed to train their base that the poor are on welfare because they are lazy and that they are undeserving of our help and care (and, that most of them are black). Here’s another lie: that tax cuts for the rich help the economy. (See Supply Side Economics, The Bush Tax Cuts & John Boehner Completely Discredited, Evans Liberal Politics, December 31, 2011, by Paul Evans.)
Really, these lawmakers, especially at the national level, are rich Republican players, or tools or puppets of the rich — “wannabe’s,” you might say — and their appeal to the base is in no way ignorant, but cold and calculating. (Even though this comment may be questionable, please note: if you watch the video, you will see where Rep. Franson ends her video with a pitch for a sexual abuse website — what does that have to do with the rest of the subjects of the video, and how calculating an appeal is that?) The overall idea, insofar as I can see, is that if you claim a thing over and over again, and you do so as supposedly lily-white Christian Republican leaders, the ordinary Republican voter can be trained to believe almost anything. In reality, as knowledgeable liberals and progressives have been trying their best to get across, the GOP, and far too many Democratic Party leaders as well, are of, by and for the rich.
They couldn’t care less about ordinary Americans, much less America’s poor.
How Christian is that?
See Why ‘Welfare Queen’ Stories Will Never Die, Yahoo! Contributor Network, January 24, 2012, by Owen Rust:
See The Food Stamp Fallacy, The Root, January 12, 2012, by Edward Wyckoff Williams: “When will Republicans be honest about who really gets the most out of welfare programs?”
See GOP Race-Baiting Masks Class Warfare, Salon on Alternet, January 29, 2012, by Daniel Denvir:
See Screwing Over Urban America: Why the GOP’s Top Contenders Hate Cities, Salon on AlterNet, January 3, 2012, by Daniel Denvir.
WATCH: Video from Youtube, which was published on March 2, 2012.
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