Now with the Morgan Chase loss of $2 billion many are calling for more regulations on the banks to preserve confidence in the system. JP Morgan was supposed to be the most responsible of the banks. If they are messing up, everyone else will probably be even worse.
These Banksters are gambling with OUR money. These are our pensions they are gambling away.
The big conservative theory is that if you take away all of the government regulations every industry will just do fine. For that reason the Glass Steagal law was done away with and that allowed the banks which had been in the business of lending people money for their homes and small business, to enter into the gambling business.
We saw how well that worked when the banksters just about destroyed the world's economy in 2007. we saw how well the oil industry did when they had little regulation with the BP disaster, and coal with the Massey mine disaster.
The losses at Morgan Chase involved "synthetic credit positions," a type of the complex financial instruments known as derivatives.
"Enhanced oversight of derivatives was a pillar of the 2010 financial overhaul law, known as Dodd-Frank, but the implementation has been delayed repeatedly and will not take effect until the end of this year at the earliest."
"JPMorgan's trades show that the derivatives market remains too opaque for regulators to oversee effectively, said Rep. Barney Frank, D-Mass., one of the law's namesakes." http://www.washingtonpost.com/business/i...
The reason Dodd Frank was delayed is that the Republicans refused to confirm the head of the agency, and the agency by law couldn't work without a head, so President Obama was forced to make a recess appointment. Then the Republicans have done everything they could to starve the agency of funds. You have the smartest minds in the business making incredibly complex financial instruments and then a $50,000 regulator is supposed to watch what they are doing.
We need to bring back Glass Steagal to get the banks back into the business of lending and also enact financial transaction taxes so the gamblers have a bit of skin in the game. http://www.debatingeurope.eu/2011/09/15/...
The main advantage of a financial transaction tax is that it would curb the harmful speculation that caused the economic collapse. Another reason is that the derivatives and hedge funds create a lot of "Phantom Wealth" that has little intrinsic value. A tax on phantom wealth is vastly superior to taxes on real wealth like labor. A financial Transaction Tax is gaining much more support http://www.cepr.net/documents/ftt-suppor...