By: Peter Morici
President Obama is shameless to cite J.P. Morgan’s $3 billion trading loss as evidence banks need more regulation.
More accurately, both may need more of a conscience, and the debacle raises serious questions about incompetence and corruption at the Federal Reserve, Treasury’s Comptroller of the Currency and Obama White House.
Those two agencies already have 110 regulators imbedded in J.P. Morgan… Yet, the Chief Investment Office, which is responsible for the London Whale’s ill-fated trades and manages nearly $400 billion dollars, had not a single regulator inside its unit.
Senior Morgan executives convinced federal officials the CIO was merely hedging, managing cash and taking no significant risks…
It turns out, the unit was also taking equity positions in distressed firms, including the publisher of Ebony, which is headed by former Obama White House official Desiree Rogers.
Investing in distressed firms is work for private equity and hedge funds, not FDIC insured banks…