As the JPMorganchase mess reminds us, the health of the economy is too important to allow the bizniz elites to have any say in overseeing it

You mean to say we're going to bust Jpmorganchase's chops over a lousy $2 billion in lousy loans? How petty can we be?

"The argument that financial institutions do not need the new rules to help them avoid the irresponsible actions that led to the crisis of 2008 is at least $2 billion harder to make today."

-- Rep. Barney Frank, responding to the news of
Jpmorganchase pooping its loan-portfolio pants

by Ken

OK, $2 billion in trading loses here, maybe another $2 billion in trading losses there -- can a financial services company be expected to keep a tight rein on every last penny? I mean, it's not like they misplaced the money and can't find it, or spent it all on ice cream and chocolates, or had it stolen out from under their noses, did the boys and girls -- but mostly boys, I suspect --there at Jpmorganchase. No, they just, you know, lost it the old-fashioned way, making crap investments.

Oops! One day we'll all look back at this and smile.

For ages now I've periodically tried to write a post anytime we're trying to figure out what kinds of laws and regulations we need to maximize the health and functionality of our economy and society, we should never under any circumstances pay any attention to the so-called "business community." It's regrettable in a way, because many businesspersons undoubedly have specialized knowledge that you would think would be of value in such discussions. It just never turns out that way, though. Allow them to so much as voice an opinion and what you'll get will be a road map for lying, cheating, and stealing their way toward gratifying their wildest greed fantasies. The dears just don't seem to be able to help themselves.

The inevitable result is catastrophe. Remember the Great Depression? The current Really Rotten Depression? These are just a couple of random, off-the-top-of-my-head examples.

IT'S LIKE DEALING WITH CHILDREN

Instead of their supposed professional expertise, what we get is their psychotic fantasies of grabbing every chunk of grabbable economic assets. You have to think of it like dealing with children. And as with children, sometimes this process has a certain innocence to it, the way a child who can't be expected to know better can be expected to run amok if allowed to, say, eat his/her way through a candy store. If you don't have a generous supply of barf bags handy, you're a fool. In this case, at least, you can entertain the hope that the little one has "learned his/her lesson." (Possible, but doubtful.) The alternative scenario is that the child being evoked is your classic juvenile delinquent, who will run will because, gosh, that's how he/she was brung up, or whatever causes such destructive behavior.

Let's say Little Billy persuaded Mom to buy him some lemons and show him how to make lemonade (or, more likely, make the stuff for him), and she let him set up a cute little lemonade stand on the sidewalk out front of the house, and Little Billy promptly bought a few billion dollars' worth of stuff (you know, iPads, Xboxes, Oreos, and whatnot) on credit in anticipation of those imminent lemonade earnings, vowing he don't plan to pay no taxes neither 'cause that's communism taking away all that money he made all by hisself and what is this, Russia?

And in all likelihood when that first pitcher of lemonade was sold (probably after Mom called the neighbors and asked if they wouldn't buy a glass), and Billy prevailed on his little sister Sally to make up another batch even though she'd never made lemonade and didn't know how, and the first few customers for the new stuff choked on it, and when Billy heard about it he cursed out old Mom for being selfish and not carrying her load.

He didn't hear about till later 'cause about then his friends Bobby and Barry came by and said they was going to go hang out at the mall and Billy informed Sally she was in charge, right after he took whatever money was in the cigar box 'cause you know he would have to get something to eat and something to drink at the mall. And by the next day Billy had lost interest, and besides, he was too busy with his Xbox and Ipad, although he was starting to get bored with them and he already ate all the Oreos.

The thing is, when Little Billy goes on Fox Noise and says sternly that regulation is strangling economic incentive, and the Fox Noise doofus smiles and winks at the camera and says, "Isn't Little Billy something, folks?," should we pay any attention? The crucial thing to remember is: Pay no attention to the doofuses on Fox Noise. Or on CNN or in the Washington Post, etc.

You're still not convinced? Okay, I know this is a low blow, but there's a job to be done here, so here goes: Does the phrase "CEO president" ring a bell? No, I'm not suggesting that the CEO president himself should have been capable of any better judgment. He was, after all, a person incapable of any kind of reasonable judgment. Look, however, at all the business whizzes who propped him up, who gave him a "career," who invested their resources in putting him in the White House, while other bizniz brains -- and probably some of the same ones -- were taking ownership of a Congress they could count on to give them their spanking-new Wild Wild West.

ANOTHER NAME TO REMEMBER: ENRON

The Enron criminal conspiracy wasn't a fluke; it was, you know, a criminal conspiracy masked as a political program, the inevitable result of the relentless campaign put in place by the bizniz interests who preached "taking the shackles off American entrepreneurs." Yeah, right. The very idea of a CEO president, whether we're talking about a CEO-stooge or a real live specimen, should be so terrifying that the bishops screech for exorcisms when they hear the words.

The problem is that, once this much is said, I've never figured out what more there is to say, except "don't don't don't don't don't." I mean, what more is there to say?

So when one of the wholly owned stooges of Big Bizniz tells you in that smarmy know-it-all voice, "We gotta do it for bizniz 'cause they's the ones what makes jobs," either punch the crap out of him or have him arrested. (Probably the punching-crap-out solution is better because the people who own him very likely also own the people who would be supposed to arrest him. Whatever you do, for gawd's sake, don't pay any attention to the jerkwad, because you know he's either on the take or a gibbering imbecile, and those are two classes of people it's wise not to allow to participate in policy-making discussions.

READ ABOUT IT IN THE NEW YORK TIMES

Because you know that if you do, it's just a matter of time before . . . well, before:

Leading members of Congress on Friday demanded that federal regulators strengthen proposed banking rules and scrutinize trading closely in the wake of JPMorgan Chase's disclosures of trading losses.

"The fact that this can happen at a bank with a solid reputation like JPMorgan is evidence that our banking regulators must remain vigilant," said Senator Tim Johnson, the South Dakota Democrat who is chairman of the Senate Banking Committee, "and why opponents of Wall Street reform must not be allowed to gut important protections for the financial system and taxpayers." The bank has been a leader of industry lobbying against new strictures on trading practices.

The chairwoman of the Securities and Exchange Commission, Mary L. Schapiro, said the agency was focused on JPMorgan Chase's newly disclosed trading losses, and other people with knowledge of the agency's activities said it was already examining possible civil violations involving the bank's public statements and disclosures.

Two Senate authors of the law restricting certain kinds of high-risk trading by banks blasted federal regulators, saying that the agency's draft regulations would not adequately address trading of the kind that has now cost JPMorgan Chase enormous losses.

Senators Carl Levin of Michigan and Jeff Merkley of Oregon, both Democrats, said in a conference call with reporters that as currently drafted by the agencies charged with carrying out the new law, the Volcker Rule, governing a bank's proprietary trading, allows banks to amass a single, large bet as a hedge against possible declines in an entire portfolio of securities.

That, Mr. Levin said, "is a big enough loophole that a Mack truck could drive right through it."

And that is what JPMorgan Chase did, the senators contend. Where the law was written to allow hedging of individual investments by banks to protect them from possible losses, it was not meant to allow hedging an entire portfolio or hedging in favor of or against movements in the economy, they said.

"That is a license pretty much to do anything," Mr. Levin said. . . .

-- from John Cushman Jr. and Edward Wyatt's
NYT report, "Bank Regulations Get Fresh Support"

Or read about it in the Washington Post ("JPMorgan losses reignite clash between Wall Street and Washington").

Just remember: There's no need to get terribly worked up about any of it, any more than I suspect, say. Sen. Tim Johnson is. Oh, I know he's talking the talk now, but talk is cheap. If there were any will in Washington to enforce the laws we already have on the books, we probably wouldn't need to talk about new ones.

IT'LL BE AN ISSUE FOR A FEW MINUTES, AND THEN . . .

I don't think I'm going too far out on a limb in suggesting that this will all blow over soon enough. It'll be like the precocious teen who poops his pants at his parents' party. You take him to his room, help him get calmed down and cleaned up, assure him it could happen to anybody, and then for everyone's sake change the damned subject as soon as possible. And back at the party everybody's thinking about it but nobody wants to talk about it, and after a while nobody even wants to think about it. With luck, Charlie Sheen will provide some fresh humiliation to get worked up about.

So maybe, maybe we'll have some sort of legislation work its way through the Senate aimed at remediating this particular little snafu, without much in the way of enforceability -- and in any case with no disposition in government to do any serious enforcing. Even that won't matter because it won't even get to that stage. Does anyone see the House Republicans -- people who look to Paul Ryan for wisdom on matters of economics and finance -- to do anything that would inconvenience the economic elites who own them?

It's not that I'm "anti-business." I'm just restating the obvious: that when it comes to overseeing the economy, the bizniz elites have no useful input to offer, a reality we ignore at our extreme peril.

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