The Richmond (VA) Times-Dispatch ran a lengthy op-ed, "Dust Off Glass-Steagall: Some Lessons Don't Stay Learned" by the Arkansas Gazette's editorial page editor, Paul Greenberg, on June 20.
The column opens by ridiculing "the King of Wall Street," Jamie Dimon's appearance before the Senate Banking Committee on June 13.
"At one point Dimon did grant that, yes, a ban on banks-cum-investment houses like JPMorgan Chase playing the market, formally known as proprietary trading, 'may very well have stopped parts of what this portfolio morphed into.'
"Then again, changing the law may very well not have prevented this little $2 billion slip-up — given the outsized egos of international financiers and the ingenious ways that ambitious gamblers (excuse me, investors) always find around the rules. The way so many did after the wall that once separated commercial from investment banking in this country was dismantled by financial masterminds like Bill Clinton (a Democrat from Arkansas) and Phil Gramm (a Republican from Texas) at the end of the past century... A bad cause always seems to unite the worst instincts of both parties.
"The old Glass-Steagall Act, itself the result of lessons learned in the Great Depression, had stood for half a century, but the appetite for self and power proved too much to keep it in place...
"Now we're assured that the old wall is being restored under a new name, the Volcker Rule. But that rule has been so diluted in the course of making it into law, and it's still so vague and unformed, with at least five federal agencies hammering out its none-too-clear provisions, the new rule may prove less a wall than just a series of gaps. With the usual favored special interests allowed to speculate with federally-insured funds.
"It would have been too simple just to re-enact Glass-Steagall and admit a mistake. Instead, a new and vast bureaucratic compromise was passed with details (the most important part) to be ironed out later, or maybe never...
"This 'solution' is supposed to let investors hedge their bets but not engage in speculation. Although no one has ever satisfactorily explained the supposed difference between hedging (good) and speculation (bad), perhaps because there really isn't much of one. Some of us suspect it's just a matter of conjugation: "I hedge, you speculate, they gamble." Hedging is starting to sound like just a polite term for betting across the board.
"If banks are going to play the market, let's call them what they are — investment houses — and let them risk their own money rather than mix it with ours, which is what happens when a federally insured bank decides it wants to be an investment house, too.
"In his appearance before the committee, Dimon emphasized that the $2 billion that JPMorgan Chase somehow lost in this welter of high-stakes deals and counter-deals (whale trades, they were called) was the company's own money, not its customers' or the government's.
"In that case, why not call an investment bank an investment bank, and not a regular, commercial bank, too, the kind that makes business, house and car loans to the rest of us?
"Because then JPMorgan Chase might not have been eligible for the federal bailout it agreed to take, or have its deposits insured by the full faith and credit of the United States of America, and in general be treated as Too Big to Fail. Like all too many other giants. Which was the country's big mistake during the Panic of '08-'09.
"It was one thing for the feds to rescue federally insured banks, another when it started taking over investment houses, hedge funds, automobile companies — you name it...
"There ought to be a clear line of demarcation where Chase bank ends and JPMorgan investments start. Instead, we get this two-headed monster that can lose $2 billion before the beast realizes it. Or at least before its CEO does.
"Let's go back to the good old Glass-Steagall Act. Let's return to the past; it would be progress."
Under the headline, "Wall Street Freaks Out Over Glass-Steagall Support," the blog www.nowpublic.com's Dr. Marty runs three LaRouchepac stories verbatim: "Wall Street's Nazis Bankroll Volcker's campaign against Glass-Steagall — Mr. Controlled Disintegration of the U.S. Economy; "Paul Volcker: 'Mr. Controlled Disintegration' is now Obama's Enforcer Against Glass-Steagall;" and "Glass-Steagall: How about Some 'Shock and Awe' for Wall Street."