Right now, Congress is doing what Congress does best:Asking tough questions in televised hearings so that America thinks Congress might actually be doing something.
Of course, Congress doesn’t actually do anything.
And no televised hearing symbolizes this better than today’s televised Congressional grilling of JP Morgan CEO Jamie Dimon.
Dimon was chosen by Congress to get beaten up on TV because:
- He’s a banker–and America has strong feelings about bankers right now
- His company just made a dumb trade and lost a lot of money
This gives Congress the excuse Congress needs to summon Dimon and ask a lot of tough-sounding questions that make Congress look busy and attentive on TV.
Later, when Congress is finished generating sound bites, Dimon will go back to his day job, and Congress will go back to… doing nothing.
How do we know that Congress does nothing?
Because, four years ago, Wall Street helped caused the biggest financial crisis since the Great Depression.
This crisis nearly destroyed the economy.
And it forced an emergency bailout that cost taxpayers hundreds of billions of dollars and was billed as the only way to save civilized society.
So, you might think that Congress would have enacted legislation that would make such a crisis unlikely to happen again.
Congress did nothing.
And now, four years later, the country’s biggest bank has revealed, again, that its own traders have no idea what they’re doing.
And Congress is still doing nothing.
Other than asking questions on TV.
Does JP Morgan bear some responsibility for the fact that its traders had no idea what they were doing? Of course. Its shareholders will eat a $2+ billion loss thanks to those traders having no idea what they were doing.
But when you hand dice to a gambler and say it’s OK for him to borrow and bet, say, $20, for every $1 he has, the gambler is going to throw the dice… especially when he knows that taxpayers and shareholders will cover any downside.
And until Congress grows a spine and enacts legislation that ends this ridiculous situation–once again separating commercial banking from gambling, increasing capital requirements–this will just keep happening.
Because as Jamie Dimon freely admitted in his opening testimony, his traders had no idea what they were doing (or didn’t care).
So Congress had better ask Jamie Dimon some entertaining questions today.
Or it might begin to dawn on America whose really responsible for the appalling lack reform of our financial system.
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