In Wake of JP Morgan Trading Debacle, House Republicans Slow Efforts to Repeal Financial Reform

Pat Garofalo
Think Progress / News Report
Published: Saturday 19 May 2012
“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.”
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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 announced Tuesday that his panel would be postponing a Thursday markup of the bills, which would have repealed or altered provisions of the financial overhaul.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.”



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ABOUT Pat Garofalo

Pat Garofalo is Economic Policy Editor for ThinkProgress.org at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.

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4 comments on "In Wake of JP Morgan Trading Debacle, House Republicans Slow Efforts to Repeal Financial Reform"

Livemike

May 20, 2012 6:09am

For god's sake stop pretending Glass-Steagall was effective in preventing anything bad. It was a corrupt corporatist piece of legislation that outlawed the safest business model for the benefit of the corrupt people with unsafe business models. Who went broke first? The combined investment/commercial banks or the uncombine? Do some basic goddamn research people.

Jeffrey Hill

May 19, 2012 2:29pm

Reinstate Glass-Steagall immediately because it worked so well for decades and decades.

The secret multi-trillion dollar bailouts that will result again if we don't could sink the country's economy permanently while allowing Obama's thieving Wall Street "Savvy Businessmen" buddies to live well for the rest of their days in this plutocracy at everyone else's expense.

Theodore Ziolkowski

May 19, 2012 2:04pm

Conservatives, Republicans, Tea-Party members and Blue Dog Democrats 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 they have been preventing financial regulators from having the budgets necessary to do their jobs.

DON'T act surprised, this is what the Republicans and Blue Dog Democrats did in the 1920's and the Conservatives, Republicans, Tea-Party members and Blue Dog Democrats have been doing since the 1970's.

We must have the Regulations that protected since FDR and the Glass-Steagall Act put back into full effect immediately.

If you are Dumb enough to vote for a Conservatives, Republicans, Tea-Party members or Blue Dog Democrats you should be willing to accept more of the same. It should also mean that you earn more than $500,000 a year, or you are not Dumb you are really STUPID.

BozoAdult

May 19, 2012 12:49pm

Anything short of Glass Steagal is inadequate.