Obama says JPMorgan loss shows need for Wall Street reform

WASHINGTON Tue May 15, 2012 12:19am EDT

1 of 3. The Wall Street sign is seen outside the New York Stock Exchange, March 26, 2009.

Credit: Reuters/Chip East

WASHINGTON (Reuters) - President Barack Obama said on Monday the huge trading loss at JPMorgan Chase & Co illustrated the need for Wall Street reform and warned that the same kind of error at a less stable bank may have required government intervention.

"JPMorgan is one of the best managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting," Obama said on ABC's "The View," according to a transcript released by the network.

"We don't know all the details. It's going to be investigated, but this is why we passed Wall Street reform," Obama said.

The program was taped on Monday in New York and will air on Tuesday.

Wall Street reform was one of Obama's signature domestic policy achievements, but he has faced opposition in trying to implement and enforce it.

"The whole point was, even if you're smart, you can make mistakes and since these banks are insured, backed up by taxpayers, we don't want you taking risks where eventually we might end up having to bail you out again, because we've done that, been there, didn't like it," Obama said, according to the transcript.

"This is the best, or one of the best managed banks. You could have a bank that isn't as strong, isn't as profitable making those same bets and we (the government) might have had to step in, and that's exactly why Wall Street reform's so important."

Obama, a Democrat, said his support for greater financial oversight differentiated him from Mitt Romney, the presumed Republican presidential nominee.

"We've got real differences here, because Governor Romney, members -- some of the Republican members of Congress and the financial industry have been arguing that this is unnecessary, that this is impeding capital formation," Obama said.

"We want a successful financial industry. That's always been one of the hallmarks of America. But what makes us the best financial industry is transparency, accountability, rules so that small investors feel like if they put their money into Wall Street, it's not going to suddenly just disappear."

(Editing by Christopher Wilson)

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Comments (9)
LittleStream wrote:
I agree, shows need for reform! It does not however show need for any more bailouts.

May 14, 2012 12:24am EDT  --  Report as abuse
kafantaris wrote:
The derivative hedging game played by JPMorgan Chase is no different than that played by AIG in 2008.
Yet Jamie Dimon tells us that JPMorgan had merely “made a terrible, egregious mistake.” He might as well have said that the bank was wrong to keep raising in a poker game when it was apparent it should have folded.
And why was JPMorgan busy betting in the first place — right after our economic meltdown, and while fighting government regulation?
One answer is that it knew it could bear the gambling losses.
That’s right. With $2 trillion at hand, JPMorgan can yawn when $3 billion goes down the tube.
Nonetheless, Dimon tells us that he sees no problem with the government dismantling big failing banks. This is good to know because the government might have to start dismantling big banks before they fail — and before they have another chance to take us down with them.
The important lesson from the JPMorgan fiasco is not that stringent regulations are still needed to reign in on derivatives, but that banks big enough to remain standing after taking huge hits are ripe enough for us to chop down to size.

May 14, 2012 12:25am EDT  --  Report as abuse
gee.la wrote:
Some ones called Jamie Dimon to go. That is kind of outraged. I don’t think anyone else can play as fascinating as Dimon will do. Many of us, I believe will feel a lot bored without him. Anyway, JPMorgan cannot afford losing him. In my opinion, to keep the banks as the way as they are is one thousand times better than any artificial reform.

May 15, 2012 1:03am EDT  --  Report as abuse
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