"Romney Says JP Morgan’s Trading Debacle Is Just ‘The Way America Works’"
JP Morgan’s $2 billion trading debacle has grown into a $3 billion trading debacle, as the White House is going on offense to push regulators to craft a stronger version of the Volcker Rule, which is meant to rein in banks’ risky trading. Even House Republicans have backed off their deregulatory zeal for the moment, in the wake of JP Morgan’s mess.
Presumptive 2012 Republican presidential nominee Mitt Romney, however, said that the loss is simply “the way America works,” and said that it doesn’t make the case for enhancing any regulations:
In his first direct comments on the bank’s missteps, Romney said, “I would not rush to pass new legislation or new regulation.” [...]
“This was not a loss to the taxpayers of America; this was a loss to shareholders and owners of JPMorgan and that’s the way America works,” he said. “The $2 billion JPMorgan lost, someone else gained.” [...]
While Romney supported the federal bailout of the banking system, known as the Troubled Asset Relief Program, he said in yesterday’s interview that the economic climate has changed and banks now should be allowed to fail.
“My own view is that if a large bank gets in difficulty, why, it can fail,” he said. “There’s no reason why the shareholders or bondholders of a bank can’t lose their funds if a bank were to get in trouble.”
Romney, in his hurry to decry regulations, misses the key point: risky bank trading is not the embodiment of capitalism if the government needs to step in and rescue a giant firm that fails. While JP Morgan survived this particular trade, there’s no telling what would happen to a bank in worse financial shape that took a similar risk. And the episode highlights that the biggest banks — which, contrary to Romney, can’t simply fail, as they could haul down the whole economy down with them — are still ready and willing to take absurd risks with taxpayer backed dollars. And Romney is happy to see them do so.
Of course, this is just part and parcel of Romney’s fealty to Wall Street interests. He has shown no interest in correcting the gaps in oversight that contributed to the 2008 financial crisis, instead promising to repeal Dodd-Frank, while laying out no alternative.