If there’s one thing to be gained from the Fail Whale trade, it’s that one section of the political class has rediscovered the need for stronger financial regulations. Whether it’s the reinstitution of Glass-Steagall, limits on bank size or simple accountability, it has suddenly become worthwhile to mention that the status quo, even after Dodd-Frank, does nothing to ensure stability in the economy and a financial system that Americans can trust.
A case in point: the above ad. Eric Griego, a Congressional candidate in New Mexico in a competitive primary there in the 1st Congressional district, released this ad today making the specific message on bank accountability, unlike one that I’ve seen before. “Wall Street has gotten away scot free, and Congress has done nothing to hold them accountable,” Griego says to a crowd at the end of the ad. “I’m Eric Griego and I approve this message because I won’t stop until Wall Street bankers who broke the law go to jail.”
The ad was produced before the revelation of JPMorgan Chase’s dodgy trade, which has brought the theme of financial reform and bank accountability back to the fore. But the Fail Whale trade gives it new resonance.
Obviously, even if he’s elected, Eric Griego alone isn’t going to make the decision to jail bankers. And though she’s spoken eloquently on the subject over the last week, Elizabeth Warren won’t do it alone either. You still have a Presidential race being waged between a candidate who wants to repeal what meager financial reform we’ve put into place over the last couple years, and a candidate who, just yesterday, called JPMorgan Chase “one of the best managed banks.”
“JPMorgan is one of the best managed banks there is,” Obama said in an interview with The View, scheduled to air on Tuesday. “Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting. We don’t know all the details. It’s going to be investigated but this is why we passed Wall Street reform.” [...]
“This is one of the best managed banks,” Obama continued. “You could have a bank that isn’t as strong, isn’t as profitable managing those same bets and we might have had to step in. That’s why Wall Street reform is so important.”
It’s actually why we need to pass something legitimate. The trades in question were probably legal because of loopholes allowed in implementation by this executive branch. There’s a difference between “this is why we passed Wall Street reform” and “this is why we need to pass something that bans these practices,” and the latter is what we’re finally hearing from political candidates on the Democratic side, after years of silence.
Obviously, there’s comfort in cynicism and despair. And I don’t know why you would think anything related to the banks would be an easy lift. But until you get people to look at the world as it should be, you don’t have a chance of coming up with solutions. In a way you have to work right now on what happens during the next crisis. Conservatives have always gotten this, that you push your ideas when in or out of power, whether they have a chance of passing or no chance. Because someday, when you get the reins again, you’ll need something off the shelf. The events of the last week have put legitimate financial reform back on the shelf.