If only the Volcker rule had been in place. If only the Dodd-Frank law had an additional 1,000 pages of rules. If only there had been more regulators at JPMorgan Chase & Co. (JPM) If only the regulators had done a better job.
Then what? The response to JPMorgan’s May 10 announcement of an initial $2 billion loss on a derivatives hedge and/or bet that was being run out of the bank’s Chief Investment Office produced a predictable response: We need more rules and regulations.
Why? We have plenty of both already. Pressing the more- regulation default button creates the impression that human beings can anticipate the next new product, asset class or financial innovation and write rules to prevent the next blowup. It also ends up deflecting attention from the real goal of financial regulation, which is not to protect the banks but to shield taxpayers from the cost of any institutional failure.
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