Forum Post: JP Morgan Crisis calls for Glass Steagall
Posted 12 years ago on May 14, 2012, 8:44 p.m. EST by arturo
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from Shanghai, Shanghai
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Clinton Labor Secretary Robert Reich's blog entry was again on Glass-Steagall on Sunday, and he warned the truth will out: "Word on the Street is that J.P. Morgan's exposure is so large, that it can't dump these bad bets without affecting the market and losing even more money. And given its mammoth size and interlinked connections with every other financial institution, anything that shakes J.P. Morgan is likely to rock the rest of the Street." Reich concluded: "What just happened at J.P. Morgan reveals how fragile and opaque the banking system continues to be, why Glass-Steagall must be resurrected, and why the Dallas Fed's recent recommendation that Wall Street's giant banks be broken up, should be heeded."
New York Times financial reporter Gretchen Morgensen endorsed Glass-Steagall in a Sunday column on JPMorgan and Dimon's hubris: "This much is clear: If the Glass-Steagall law were still around, the problematic trading at JPMorgan would not have occurred." This was after reviewing former FDIC Deputy Commissioner Michael Greenburger's arguments, circulated Saturday afternoon, a complicated scenario that the Volcker Rule plus the Lincoln Rule would have ameliorated the loss.
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