the problem with romney prescription for excessive risk taking

Sometimes it’s hard to explain why we need strong financial regulation — especially in an era saturated with pro-business, pro-market propaganda. So we should always be grateful when someone makes the case for regulation more compelling and easier to understand. And this week, that means offering a special shout-out to two men: Jamie Dimon and Mitt Romney.
I’ll come back shortly to the troubles at JPMorgan Chase, the bank Mr. Dimon runs. First, however, let me talk about Mr. Romney, whose remarks about those troubles were so off-point that they constitute a teachable moment.

Here’s what the presumptive Republican presidential nominee said about JPMorgan’s $2 billion loss (which may actually have been $3 billion, or $5 billion, or more, but who’s counting?): “This was a loss to shareholders and owners of JPMorgan and that’s the way America works. Some people experienced a loss in this case because of a bad decision. By the way, there was someone who made a gain.”

What’s wrong with this statement? Well, suppose that someone — say, Jimmy Stewart in the movie “It’s a Wonderful Life” — runs a bank that takes in deposits and invests the money in various ways. And suppose that one of those investments is a risky bet on some complex financial instrument, with Mr. Potter, the evil plutocrat, on the other side.

If Jimmy Stewart’s bet pays off, we’re in Romneyworld: he’s made money, Mr. Potter has lost money, and that’s that. But suppose Jimmy Stewart loses his bet. If the bet was big enough, he no longer has enough assets to pay off his depositors. His bank collapses, probably in a chaotic bank run that takes down the whole town’s economy as collateral damage. Mr. Potter makes money on the deal, but so what?
The point is that it’s not O.K. for banks to take the kinds of risks that are acceptable for individuals, because when banks take on too much risk they put the whole economy in jeopardy — unless they can count on being bailed out. And the prospect of such bailouts, of course, only strengthens the case that banks shouldn’t be allowed to run wild, since they are in effect gambling with taxpayers’ money.

Incidentally, how is it possible that Mr. Romney doesn’t understand all of this? His whole candidacy is based on the claim that his experience at extracting money from troubled businesses means that he’ll know how to run the economy — yet whenever he talks about economic policy, he comes across as completely clueless.
http://www.nytimes.com/2012/05/21/opinion/dimons-deja-vu-debacle.html?_r=2&partner=rssnyt&emc=rss

 

Could be the dumbest and most desperate article I've ever read.

But it sure gives you a could snapshot of the liberal brain.

 

FT, don't read that shit.

Bailey Building and Loan is not how banks operate,anymore.

(don't ask me though on how they operate in today's world, I have no fucking clue)

But..

A piss poor comparison to todays world esp coming from a paper with the word "New York" in it.

 

cant wait to hear your rational for banks gambling with depositor money. dont expect much of a rational argument.

 

"Sometimes it’s hard to explain why we need strong financial regulation "

Wtf? Get someone who can explain it then..

 

"I’ll come back shortly to the troubles at JPMorgan Chase, "

Why don't you come back to MF Global? Let's find that biilion or so and get back to JP later.

 

"(don't ask me though on how they operate in today's world, I have no fucking clue)"

 

Which is obviously way worse than banks gambling with tax payers money, right. Let's socialize losses amongst the commune and keep the ponzi scheme going for the politicians.

LOL!!!

 

since mf global is somewhat similar to the jpm case why is it you have such a hard time grasping the concept. taking undue risk with depositor assets should be banned.

 

you arent too bright are you? the taxpayer problem is a direct result of what you just made fun of in that article.