New Wall Street Scandal Threatens Romney (on policy to repeal reform)

[ProSense]

New Wall Street Scandal Threatens Romney

Brian Beutler

A surprising development on Wall Street Thursday could magnify a little-discussed but key difference between President Obama and Mitt Romney — one with enormous consequences for public policy.

On a conference call with analysts, JP Morgan CEO Jamie Dimon announced that his firm had lost $2 billion investing in the same species of derivative that exacerbated the 2008 financial crisis.

Dimon claims the company is prepared to absorb the loss, but it puts the reputation of one of the only big firms to weather the 2008 financial crisis directly on the line.

This is exactly the type of major loss of depositor money that the Obama administration sought to ban with one of the major planks of its 2010 Dodd-Frank Wall Street reform law — the Volcker Rule, named after former Fed chairman Paul Volcker. And that’s bad news for Romney, who wants to repeal the whole law, Volcker Rule and all.

- more -

http://tpmdc.talkingpointsmemo.com/2012/05/romney-volcker-dodd-frank-jp-morgan-wall-street.php

[ProSense]

1. Kick! n/t

[Tarheel_Dem]

2. This was discussed on The Diane Rehm show this morning. The panelists agreed....

that this puts Dodd-Frank, front and center again, despite the millions JP Morgan has spent to destroy it. Let's hope!

[meow2u3]

3. K and R nt

[Trillo]

4. Just what does "absorb the loss" mean?

I'm sure there will be static or immediate effects (such as shareholders taking the hit), but also dynamic or ripple effects. JPMorgan will be under pressure to increase earnings in *any profitable areas* to offset. Or, stated differently, the loss will likely be used to reduce their profit, lowering their taxes owed to government.

Are derivatives being used to effectively create losses to avoid tax-paying obligations? This seems to be how it works, so where must government make up the reduced monetary intake from such corporate tax avoidance? Does government then have to raise taxes on the rest of us, for us to have enough total tax income to provide desired services?

[Flying Squirrel]

5. Eh, what reputation would that be?

I`m sure they`ll make up that 2 billion soon enough. The change of terms notices should already be hitting the mailboxes of those few credit card users who have still managed to avoid getting jacked up to the default rate. Chase will NEVER see me or anyone I can talk out of it as a customer again.