Letter: JP Morgan not a case for more rules
Jamie Dimon, chief executive of JPMorgan Chase got shareholder endorsement Tuesday, May 15, 2012, of his $23 million pay package. Of course, the votes were cast before he announced the bank's $2 billion loss in a risky investment. Credit: AP, 2009
Newsday's call for additional financial reform, "given the financial crisis of 2008 and its legacy of unemployment and foreclosures," misses the mark ["Learn from Morgan's loss," Editorial, May 15]. The anticipated insolvency of Fannie Mae and Freddie Mac, not investment banks, ignited the financial credit crisis of 2008.
The loss at JPMorgan Chase was large, but not as a percentage of its holdings, and never once was taxpayer money at risk. Yet the FBI has begun an investigation. The company is a $2.3-trillion institution with more than $1 trillion in deposits and $20 billion a year in revenues. What's more, JPMorgan Chase acknowledged its $2 billion loss.
Frivolous political attacks against Wall Street work against the interests of all New Yorkers. It is estimated that taxed transactions from Wall Street contribute more than $25 billion annually to New York's $130-billion state budget. JPMorgan Chase employs thousands in the tristate area. Additional reforms would only reduce earnings, which would result in job losses.
Today, as a result of the Dodd-Frank legislation, taxpayers are sufficiently protected from loss. Investment banks are required to post collateral and clear derivatives through central counterparties. The latter ensures that large losses are dispersed among investment bank members.
In California, Gov. Jerry Brown estimated a deficit of $9.2 billion in January, only to revise it last week to $15.7 billion. In that context, requesting distinguished federal agencies such as the FBI to investigate JPMorgan Chase on the grounds of protecting taxpayers, over a $2-billion loss that hurt investors but had no impact on taxpayers, seems quite misguided.
Michael P. Mulhall, Rockville Centre
Editor's note: The writer is a senior capital markets business analyst and a former institutional bond trader.
