May 10, 2012
WASHINGTON – Congressman Barney Frank, Ranking Member of the House Financial Services Committee, today released the following statement regarding the announcement yesterday by JPMorgan Chase that it will lose $2 billion due to trading on credit derivatives.
This regrettable news from JPMorgan Chase obviously goes counter to the bank’s narrative blaming excessive regulation for the woes of financial institutions. Interestingly, in the Economist’s long attack on the financial reform bill, one of their leading examples of the harm the bill is doing was JPMorgan Chase’s assertion that complying with the new rules will cost $400 to $600 million at the outset (a number which will obviously go down as compliance processes are set in place). In other words, JP Morgan Chase, entirely without any help from the government has lost, in this one set of transactions, five times the amount they claim financial regulation is costing them.
The argument that financial institutions do not need the new rules to help them avoid the irresponsible actions that led to the crisis of 2008 is at least $2 billion harder to make today.
The 2010 Wall Street Reform and Consumer Protection Act includes language, commonly known as the Volcker Rule, which would force large financial institutions to restrict proprietary trading. Most large financial institutions and organizations which represent them have strongly opposed the Volcker Rule, and have worked to weaken the final rule and slow its implementation.
Committee on Financial Services • B301C Rayburn House Office Building • Washington, DC 20515 • (202) 225-4247
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