Cantwell, Murray to regulators: Get tougher on banks
Washington’s two U.S. senators are calling on regulators to get tough on big banks in the wake of JPMorgan Chase’s trading loss of more than $2 billion — a loss that is widely seen as a symptom of a system that allows banks to take too many risks.
But if the Senate Banking Committee response to JPMorgan Chase’s (NYSE: JPM) gambling loss is any indication, there is a limited amount of political will in Congress to tighten the regulatory lasso around banks.
JPMorgan CEO Jamie Dimon is testifying before the House banking panel Tuesday, a week after he made a similar appearance before the Senate Banking Committee. Senators who sit on that panel were widely scorned for their performance, many choosing to use the hearing as a platform to rail against more banking regulations.
Here’s a sampling of comments from senators at the June 13 hearing, according to The Washington Post;
“Mr. Dimon,” said Sen. Mike Johanns (R-Neb.), it “occurs to me that an enterprise as big and powerful as yours, you’ve got a lot of firepower and you’re — you’re just huge.”
“You’re obviously renowned, rightfully so, I think,” contributed Sen. Bob Corker (R-Tenn.), “as being one of the most, you know, one of the best CEOs in the country.”
Some Democrats on the Senate Banking Committee voiced similar sentiments. As the Post and others pointed out, JPMorgan and other banks have contributed heavily to members of the Senate Banking Committee. And it appeared committee members did not want to seem impolite when it came time to question Dimon.
The Senate Banking Committee’s staff, meanwhile, has been referred to as the “fuzzy pet” of the banking industry, thanks to the revolving door that has seen staffers come and go from jobs as bank employees to lobbyists to Senate staff members helping arrange hearings and craft legislation.
Now Washington's two senators, Maria Cantwell and Patty Murray, are joining 13 other senators (all Democrats except Bernie Sanders, an independent from Vermont) in calling for regulators to implement all of the Dodd–Frank Wall Street Reform and Consumer Protection Act that was passed in 2010 in the wake of the Great Recession.
The senators have sent a letter to U.S. Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Securities and Exchange Commission Latest from The Business Journals Details emerge: VinSolutions sale price was 5M7 Billion People collects another KKLD Energy collects 1K financing Follow this company Chairman Mary Schapiro, Commodities Futures Trading Commission Chairman Gary Gensler and Comptroller of the Currency Thomas Curry.
Three of the senators who signed the letter, including Oregon Sen. Jeff Merkley, also sit on the Senate Banking Committee.
In the letter, Cantwell, Murray and the others urged the regulators to “take stronger, faster action” to implement the Dodd–Frank law, which they said includes “provisions designed to reduce excessive speculation, manipulation, and systemic risk created by trading in the $700 trillion derivatives market.”
Specifically, the senators want to see limits put on excessive speculation, the kind of behavior that blew up in Dimon’s face. The senators want to close off-shore loopholes that allowed London-based traders for AIG and JPMorgan Chase to bet and lose billions on derivatives.
The senators also want the so-called Volcker Rule enforced. The rule is part of the Dodd–Frank law and designed to bar banks that are covered by Federal Deposit Insurance Corp. depositors' insurance from making risky investments.
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