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In Wake of JP Morgan Trading Debacle, House Republicans Slow Efforts to Repeal Financial Reform
JP Morgan’s $2 billion trading loss has renewed interest in the Volcker Rule, part of the Dodd-Frank financial reform law meant to prevent banks from engaging in risky trading with federally backed dollars. Wall Street banks have been lobbying to water down the rule. In fact, JP Morgan CEO Jamie Dimon helped open up a loophole that would allow the sort of trading that cost the bank billions.
House Republicans, of course, have been following Financial Service Committee Chairman Spencer Bachus’ (R-AL) directive to “serve the banks” by helping them in their efforts to water down and dismantle Dodd-Frank. In addition to preventing financial regulators from having the budgets necessary to do their jobs, the House GOP has been chipping away at Dodd-Frank, voting to repeal several important provisions.
But in the wake of JP Morgan’s mess, that effort has stopped, at least temporarily:
House Agriculture Committee Chairman Frank Lucas (R-Okla.) announced Tuesday that his panel would be postponing a Thursday markup of the bills, which would have repealed or altered provisions of the financial overhaul.
Lucas directly cited the high-profile losses of the nation’s largest bank as the reason for the delay, saying he wanted to make sure the bills would not inadvertently encourage Wall Street to take on risk haphazardly.
“As always, Washington has a tendency to overreact,” he said in a statement. “While the news of JP Morgan’s trading loss is unfortunate, the bipartisan legislation the Committee was scheduled to consider is unrelated to the cause of the trading loss. However, this Committee will take the time to gather all relevant information before we proceed to ensure there are no unintended consequences of the legislation that would encourage recklessness in our financial institutions.“
House Republicans have aimed to water down the derivatives section of Dodd-Frank, which would bring transparency to the opaque market that helped blow up the economy in 2008. However, JP Morgan’s woes have evidently made them think twice. Today, President Obama explained how JP Morgan’s trading loss shows “exactly why Wall Street reform’s so important.”