Here's an article from today's[LIST]

For J.P. Morgan Trader, From 'Caveman' to 'Whale' - WSJ.com

Let me ask a couple questions...

• Do you think for an instant that the management of J.P. Morgan was willing to risk those kinds of losses and all the concomitant bad publicity and embarrassment, even though the trader's business was very profitable?

• Do you think the woman responsible for trading risk, a thirty-year bank veteran who was the highest paid woman on Wall Street--she was paid $31.5 million in the last two years alone--would risk her entire career on the risks being created by some rogue trader several levels lower than her on the org chart?

• If experienced bankers can't understand or keep up with the risks associated with individual traders trading new and quickly developing new financial derivatives, what chance do you think a ponderous, low paid, politically motivated group of Fed regulators will have in preventing recurrence of events like the recent JPMorgan loss, maybe even instances which would threaten the survival of some "too big to fail" banks (again)?

• Are the risks of getting effective regulation even worse than we understand as the result of lobbyists paying off those writing the regulations? Senator Carl Levin forewarned on a Sunday talk show last weekend that there was a real risk that the lobbyists would "gut the requirements established by the Dodd-Frank bill" by lobbying the regulators?

I've noted before that a simple 13-page law passed in 1933, the Glass-Steagall Act, protected our banking system very effectively for half a century. It simply said that commercial banks could not put their capital at risk by speculative trading. Trading had to be done by investment banks. The commercial banks were nowhere near as profitable as the investment banks, and their management bonuses were a fraction of those of the traders, of course. That's why the commercial banks lobbied so hard to get Congress to repeal Glass-Steagall in 1999. So the law that protected the country's commercial banking system and our economy from the greed of the bankers themselves was eliminated.

So what do you think the chances are of Congress reinstituting Glass-Steagall?

What, this Congress? With the lobbyists actually writing the bills and paying the members of Congress to pass them? Or the lobbyists writing the regulations and then paying the mid-level bureaucrats to publish them?

What's scary are the positions of President Obama and his administration, as well as Mitt Romney, who's trying to replace him. Obama and his Fed seems to think that the "Volcker Rule", which is part of Dodd-Frank and scheduled to go into effect in a couple months, is the answer. Most experts think the banks can easily circumvent those rules and that they won't provide the intended result. Mitt Romney has said he doesn't believe any regulation is necessary at all. Just let the free market control the risks, he says. I guess he means let the big bank(s) who take too much risk fail, regardless of the effect on the U.S. and world economy. Neither is suggesting a return to the simplicity of Glass-Steagall", that worked so well for decades.

Sadly, we're kidding ourselves if we expect better or any effective changes at all. I sure don't know the answer to the sad state of affairs of the way our country is governed. As individual voters, we simply don't have the voice or the money to compete with the special interests who so clearly now run the country.

Remember, I'm a retired investment banker.

VK you nailed it with the following:

"What, this Congress? With the lobbyists actually writing the bills and paying the members of Congress to pass them? Or the lobbyists writing the regulations and then paying the mid-level bureaucrats to publish them?"

This is the matter with Washington on every single major issue facing this country. That is why I refuse to use terminology regarding congress or the POTUS as "representatives" of the people.

They have no shame in the way they operate. Just look at the ratings. Look at their demeanor when labeled a do nothing congress. Zero impact.

BUSINESS AS USUAL!!

btk

Rep. Paul Ryan in favor of Glass Steagall:

PaulRyanGlassSteagel - YouTube

Originally Posted by Villages Kahuna

Here's an article from today's[LIST]

For J.P. Morgan Trader, From 'Caveman' to 'Whale' - WSJ.com

Let me ask a couple questions...

• Do you think for an instant that the management of J.P. Morgan was willing to risk those kinds of losses and all the concomitant bad publicity and embarrassment, even though the trader's business was very profitable?

• Do you think the woman responsible for trading risk, a thirty-year bank veteran who was the highest paid woman on Wall Street--she was paid $31.5 million in the last two years alone--would risk her entire career on the risks being created by some rogue trader several levels lower than her on the org chart?

• If experienced bankers can't understand or keep up with the risks associated with individual traders trading new and quickly developing new financial derivatives, what chance do you think a ponderous, low paid, politically motivated group of Fed regulators will have in preventing recurrence of events like the recent JPMorgan loss, maybe even instances which would threaten the survival of some "too big to fail" banks (again)?

• Are the risks of getting effective regulation even worse than we understand as the result of lobbyists paying off those writing the regulations? Senator Carl Levin forewarned on a Sunday talk show last weekend that there was a real risk that the lobbyists would "gut the requirements established by the Dodd-Frank bill" by lobbying the regulators?

I've noted before that a simple 13-page law passed in 1933, the Glass-Steagall Act, protected our banking system very effectively for half a century. It simply said that commercial banks could not put their capital at risk by speculative trading. Trading had to be done by investment banks. The commercial banks were nowhere near as profitable as the investment banks, and their management bonuses were a fraction of those of the traders, of course. That's why the commercial banks lobbied so hard to get Congress to repeal Glass-Steagall in 1999. So the law that protected the country's commercial banking system and our economy from the greed of the bankers themselves was eliminated.

So what do you think the chances are of Congress reinstituting Glass-Steagall?

What, this Congress? With the lobbyists actually writing the bills and paying the members of Congress to pass them? Or the lobbyists writing the regulations and then paying the mid-level bureaucrats to publish them?

What's scary are the positions of President Obama and his administration, as well as Mitt Romney, who's trying to replace him. Obama and his Fed seems to think that the "Volcker Rule", which is part of Dodd-Frank and scheduled to go into effect in a couple months, is the answer. Most experts think the banks can easily circumvent those rules and that they won't provide the intended result. Mitt Romney has said he doesn't believe any regulation is necessary at all. Just let the free market control the risks, he says. I guess he means let the big bank(s) who take too much risk fail, regardless of the effect on the U.S. and world economy. Neither is suggesting a return to the simplicity of Glass-Steagall", that worked so well for decades.

Sadly, we're kidding ourselves if we expect better or any effective changes at all. I sure don't know the answer to the sad state of affairs of the way our country is governed. As individual voters, we simply don't have the voice or the money to compete with the special interests who so clearly now run the country.

Remember, I'm a retired investment banker.

Question VK....in doing some reading on this, I read and I will do the best I can to ask my question and seem to have some idea of what I am talking about.......

The transaction was a transaction the bank makes to make money for itself and not its clients, a proprietary trade. In any case, where not these trades outlawed by Obama in the Volcker rule ?