Photo: MikeyAngels on flickr
After what happened in 2008 there are few who argue we don’t need any regulation, the most salient argument is that what has been proposed is too complex.This thought is coming from both sides too, those in favour of more rule making and those like Jamie Dimon, who are not.
The JP Morgan CEO put it this way in his most recent letter to investors:
As a result of Dodd-Frank, we now have multiple regulatory agencies with overlapping rules and oversight responsibilities. Although the FSOC was created, it is proving to be too weak to effectively manage the overlap and complexity. We have hundreds of rules, many of which are uncoordinated and inconsistent with each other.
Dodd-Frank, alone, is over 2,000 pages. How do you explain it to the American people? And if you can’t explain it to the American people, how can you make them angry when lobbyists destroy it (and other regulation)?
You simplify it. Here’s the idea — You can be a sleepy, advisory bank that specialises in lending money to every day people, or you can take massive bets. We should have simple legislation that forces banks to choose.
Author Michael Lewis said it this way: “You can either be Charles Schwab or a hedge fund.”
We’ve been hearing that whispered around for a while now in the financial community, but what about the rest of the world? Now, while JP Morgan is taking massive heat for their $2 billion trading loss, is the perfect opportunity take it out to the mainstream press.
It’s not like this idea is new, The Volcker Rule is supposed to make this separation. However, Volcker has been postponed to 2014 in what Rolling Stone writer Matt Taibbi insists is an attempt to kill it entirely. And at this point, that tactic might work since the regulation’s enemies have spun it out as too complex, too difficult to understand, the American people don’t care.
But there’s a way to change their minds — find a simple argument they can understand. Create a rallying cry that will drum up public opinion in favour of regulation and create a force that politicians must actually reckon with.
JP Morgan’s misfortune creates the perfect opportunity for regulation advocates to make a simple, new case. Let’s see if they take it.