JP Morgan’s news about a multi-billion dollar loss has crushed the banking industries revitalization and brought up more questions and the need for regulation. Jamie Dimon revealed a $2 Billion loss in JP Morgan’s Chief Investment Office. Obviously the bank got caught in the highly speculative segment of “synthetic” assets. Dimon explained that the net loss after off-setting other gains will amount somewhere around $800 million with potential to grow over the next couple of quarters.
The news has caused new uncertainty and has fueled new regulation supporter’s case. Indeed, regulation and government oversight are two major topics of this year’s election. The country’s economy has suffered a great deal in the aftermath of the financial crisis and continues to do so. JP Morgan’s blunder has not helped in making things better. It has to be seen what is unfolding in this case and what else is attached to it. Usually when things like this happen, someone else comes out of the bushes admitting the same misery.
Considering the damage such business practices cause for the economy and trust in the banking system, there is no way that the system can continue without serious regulation and oversight. Opponents of new regulations attempts to save the status quo now sound more like crying children complaining they can’t have more candy. This will clearly change the course of political campaigns of both parties in the coming election regarding regulation.
The banking industry has already major reputation problems and can hardly draw a positive opinion from Main Street America. Recent careful attempts of some major players to approach the problem and make things better are facing a complete reset with the newest developments. The immediate question for everyone is now, “what else is luring” and what else have people to endure. If there was any trust left or rebuild, it certainly didn’t get better.
The Main Street Analyst 