Really Mr. President?

[trumad]

58. You really do not know what you are talking about....

<snip>
The JPM episode touches on all the major protections of D-F, which at the behest of Wall Street lobbying will not go into effect for months if not years and therefore did not apply to the JPM trades in question.

If the trades at issue were proprietary trading (as now appears to be the case), they would be banned by the Volcker Rule. Even if these trades were not proprietary, but, as they almost surely were, uncleared, they would have been banned by the Lincoln or push out rule. There is now a bi-partisan effort in the House to dump the Lincoln Rule.

If Dodd-Frank had been in effect, these trades would almost certainly have been required to be cleared and transparently executed. So they would have been priced by objective clearing operations on at least a weekly basis for purposes of collecting margin against the losing nature of the trades. As the trades lost value, margin would have been called for on a regular and systematic basis. (The losses would never have reached $ 2B without much earlier and corresponding regular calls for margin.) The losing nature of the trades would have been transparent to market observers and regulators for quite some time and the losses would not have piled up opaquely. It is almost certain that, at the very least, the Fed (not wanting to exacerbate its reputation for throwing taxpayer money at TBTF problems), would have backed JPM off these trades long ago.

Even if the trades were not required to be cleared, they still would have had to be reported to the public and to the regulators.


Read more: http://www.rollingstone.com/politics/blogs/taibblog/jamies-cryin-dimon-j-p-morgan-chase-lose-2-billion-20120511#ixzz1v3apBGkb