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May 16, 2012


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James Pannabecker

I'd like to think Dimon learned from this event. Among other things, though, I'm concerned that the transaction illustrates that banks (and product designers) still don't understand the complicated nature of the derivatives transactions in which they're engaged. Do they really understand and have they identified the risks of what they're doing? Is $2B the tip of an iceberg?


I think this proves the point, that 'Wall Street' has not learned. Dimon and his cohort are like children who don't learn a lesson.

I realize this is not exactly the same. My point is - as a parent - I see this man as an irresponsible child. He doesn't care about the $2 billion loss. He wouldn't really care if it was $20 billion. Because on getting the news he'd turn to Washington and ask for a handout.

Newsweek recently had an article about the fact that unlike the Bush I Administration that criminally prosecuted bankers following the S&L debacle, there's been a lot of showmanship but no follow-through by the Obama Administration.

The truth is that for bankers like Dimon who were ultimatelu responsible given their sophistication, there have been no consequences. And as any parent will tell you, bad behavior will be repeated.

The true fault of President Obama, which he cannot pass off to his predecessor is what he has failed to do to punish the bankers responsible for actions contributing to the Great Rescession. In other words, even if for argument's sake, George W Bush's de-regulation was the cause of the Great Rescession, Barach Obama's failure to punish wrongdoing is the worse merely because it taught people like Dimon that they can get away with their shenanigans.

Kim Krawiec

There's some speculation in the press today, James, that there may be more losses -- they don't know, of course, but it is a reasonable story. I may blog more about that later today if I have time.

You may have seen, Adam, that a few folks are calling for more stringent measures, such as breaking up large banks or returning to Glass-Steagall, in the wake of this news. That's probably not the same as what you have in mind with "punishment" (which I take to be a call for individual accountability) but it is more harsh than Dodd Frank. I doubt that any of these proposals will have traction, absent another 2008-like episode.


I did. I heard Robert Reich speak to this on NPR, calling for Glass-Steagall to be brought back.

I do think some individual accountability is necessary. I do not believe that calling Dimon down to a congressional hearing and reading him the riot act is useful at all. What did HE authorize or not is not, I think, a practical exercise.

If Congress or anybody wants to get at the root of the problem, which is what was being done, what was approved, who approved it and who was executing it and when were these authorizations and executions happening, then the people Congress should be speaking with are below Dimon.

IMHO let Dimon sit in his comfy NY office wondering and worrying when the FBI comes to get him. By giving his a platform to swear out yet one more mea culpa, Congress does nothing more than play into Dimon's hand.

Kim Krawiec

"I do not believe that calling Dimon down to a congressional hearing and reading him the riot act is useful at all. "

On this we are in complete agreement (as any sane person should be). But the pols must have their few moments on tape giving Dimon a tongue-lashing to prove that they're not all soft on the banks. Yada yada.

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