A big shake-up and calls for Congressional hearings this morning after JPMorgan Chase reports a stunning $2 billion loss. It happened late last week when the financial giant revealed it had made risky credit bets in the European market. There are three executives are expected to resign – and Bloomberg is reporting JPMorgan's entire chief investment office in London could be let go.
The trades are raising some very serious questions about whether the country's biggest bank learned anything from the financial crisis four years ago. And what happened to the laws that were supposed to stop this?
Many of the rules created by the Dodd-Frank bill still aren't in place, two years later. JPMorgan Chase CEO Jamie Dimon, acknowledging this new mess could give regulators and members of Congress more reason to tighten any loopholes. Dimon also sits on the board of the New York fed, which regulates banks.
Elizabeth Warren, Democratic candidate for U.S. Senate in Massachusetts and consumer advocate, says Dimon should step down from the NY Fed board.
"Banks have been loading up on risk and they don't want to be accountable," Warren says. "Jamie Dimon not only is CEO of JPMorgan Chase, he holds this position of public trust, advising the New York Fed. on how to regulate risk for these large financial institutions, like his own finanicial institution."
She adds, "It's not just conflict of interest, it's a real point about attitude here. This isn't personal to Jamie Dimon. It's what's been going on ever since Dodd-Frank passed. There's been a guerrilla war out there in which the largest financial institutions have been doing everything they can to make sure that financial regulations don't get put in place. And if they do get put in place, that they're loaded with loopholes and not very effective. There's been a lobbying army hired by these financial institutions becasue they really don't want to have any oversight."
She also says why she prefers to go back to 'boring banking' rules for banks so a customer's personal funds aren't used in risky transactions.