The latest gaffe concerns the focus on JP Morgan caused by its loss of more than 2 billion dollars and the attempts now being made to take the bank, and its leader, Jamie Dimon, to task in congressional hearings where Democrats hope to further clip the institution's wings.
However, although the amount concerned is huge, the funds belonged to the bank itself, not its depositors, and were lost in the normal course of business arising from bad decisions regarding a credit derivative trade. But nonetheless, with urging from the White house, it’s likely that more regulations and governmental oversight regarding banking will be forthcoming soon.
Now, on the surface that may sound like a good idea to many who think the largest banks in the world should be closely monitored, if not totally controlled, by government. But in the long run, that’s a tactic that really doesn’t work because while it may provide some degree of protection against losses, it simultaneously inhibits most types of risks. And as far as risks are concerned, they exist to some degree in every single loan.
Consequently, in attempting to curtail particular banking activities, lawmakers now chance inhibiting business growth because, as usual, they’re unable to understand the particulars of the problems they’re trying to solve. Therefore the end result will be more curtailment of business activity which will, in turn, further reduce the incumbent’s chances of reelection.
Which is why I suggested at the start of this entry that the best thing Mitt Romney can do toward being elected is to leave the incumbent absolutely alone, because as each day goes by he finds new ways to sink himself..
That’s it for today folks.
Adios
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