The dilemma of the regulation of banking

The debate on the regulation to the financial sector was revived with the loss of JPMorgan, in full electoral campaign in the United States.UU.

The largest bank in United States, JP Morgan Chase, attracted support from its shareholders after revealing a big mistake of investment in financial derivatives that cost him $2,000 million.

Jamie Dimon, Chief Executive of the institution, met with shareholders, not in New York, where the Bank has its headquarters, but in the city of Tampa, Florida.

The votes in favour were majority, although nearly all were issued before the announcement of the loss.

Dimon apologized for the "terrible and awful mistake" and admitted to having been wrong by dismissing warnings, particularly those from the offices in London.

The case brings to light the issue of financial reform in the United States.UU. the crisis of 2008.

Jennifer Erickson, Director of competitiveness and economic growth of the Center for American Progress, told BBC World "the importance of having good regulations for a strong and stable financial sector as soon as possible".

Erickson explained that "have passed almost four years of the collapse of Lehman Brothers, nearly two years of the adoption of a historical legislation - the minutes Dodd-Frank for protection of the consumer and reform of Wall Street - aimed to strengthen the financial sector and protect consumers and taxpayers, but so many of these important standards have not yet been implemented, and I believe that the error of JP Morgan demonstrates the importance of learning the lessons of 2008 and make sure that we have" "the correct regulations in force".

The Chief Executive of JPMorgan, Jamie Dimon, said "there was no excuse" for the failure of the Bank.

Marc Calabria, director of financial regulation of the Cato Institute studies, believes that "many people did not learn the lesson or maybe learned the wrong lesson".

In an interview with BBC World, Calabria commented: "I don't think that we are talking about the mistakes of last time." "We must first begin by observing that this was a loss is not systemic nor will leave bankrupt JP Morgan."

"In contrast to the situation in which the financial system most invested in properties and mortgages, when all fell like a waterfall, that did not happen this time and there was in fact no net loss for the system," he said. "Banks should expect losses".

However, Erickson recalled that "banks are somehow special: if they get into significant problems, we see that while the profits are private, the losses become public".

"Saw it in United States in 2008 and in other countries," says Erickson. "The issue is that when the activities of a private company they may eventually incur a risk involving other public rescue, it is good that the public is concerned and that regulators act and to ensure that risks are appropriate."

In contrast, Calabria mentions as an example the fall of the stock market in 1987, "when the Federal Reserve flooded the city of liquidity, I thought was the overreaction of the regulators and the fed to every setback which led to an area of complacency, in the sense that regulators are always protect us".

Jamie Dimon's meeting with the shareholders of JPMorgan in Tampa Tuesday provoked protests of "outraged" in that city.

"I think that if there is an occasional mishap that do not put the system to its knees, really strengthens the system in the long term," adds Calabria.

"Focus on the Volcker rule and things so this case of JP Morgan is out of place." There are much larger failures in our financial system. "What happened between 2002 and 2005, with three years of a real federal funds rate negative, essentially paying people to borrow, was in my opinion the recipe for disaster, and we are repeating her."

Rule Volcker, part of the Dodd-Frank Act, imposed commercial restrictions on financial institutions, especially in the field of speculation which do not benefit customers, to prevent disasters like the 2008. Jamie Dimon is one of his most ardent critics.

But we would have avoided the mistake of JP Morgan with more regulation? "To some extent can be avoided with more regulation, but a banking system that does not suffer losses or mistakes is not valid for us," says Calabria.

"I am in disagreement with the implicit presumption that the objective is a system to test for errors." All human systems make mistakes, the thing is to limit them. In this case, JP Morgan made a bet and lost, but the financial system continues. "I am concerned think that regulation will clean the system of risks, which is ridiculous, because such an attitude creates more risks and makes us more vulnerable."

Jennifer Erickson defends regulation in the context of the electoral process in the United States.UU.: "the American people have a real option in terms of policy differences." Mitt Romney said it reversed Dodd-Frank, while Barack Obama expressed that what happened last week shows the urgent need for reform. "I think that here the people remembers acutely the pain of 2008 and 2009 and that much of the country continued to suffer that pain and understand why we must have a strong financial sector."

In that regard, the spokesman for the White House, Jay Carney, said that President Obama had struggled much to enhance the supervision of us banks and investment houses and events at JP Morgan demonstrated the importance of fully implementing a reform on Wall Street.

"This is one of the best managed banks," the own Obama he stated in an interview on television. "If it had happened with a bank not so strong or so lucrative, we should have spoken."

The FBI, the Federal Bureau of investigation of EE.UU., already announced an investigation into losses of JP Morgan, which could lead to criminal charges.

This Monday the Bank confirmed the resignation of a high Executive involved in losses, Ina Drew, the head of the investment Office of the Bank and who had more than 30 years with the institution and who had been allocated a juicy bonus.

Losses originated from a small unit of the Bank in London. According to reports, Achilles Macris, responsible for the Department of
investment, and Javier Martín-Artajo, the same unit, will be dismissed, as well as the corridor Bruno Michel Iksil, known as "the London whale" and directly responsible for the failed operation.

"I understand that they are still under consideration if they will make or not bonds employees that are going", says Marc Calabria, referring to the case of Ina Drew. "They fired people." In a very short time they threw to at least three employees. I would contrast this with any regulator has lost their jobs despite repeated failures. "I refuse to think that we should punish the people simply for making a bad bet".

View the original article here

Peliculas Online