US President Barack Obama has said that the huge trading loss at JPMorgan Chase & Co showed the need for Wall Street reform and the same kind of an error at a less stable bank may have required government intervention.
"JPMorgan is one of the best managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting," Obama said on ABC's "The View," according to a transcript released by the US network on Monday.
"We don't know all the details. It's going to be investigated, but this is why we passed Wall street Reform," Obama said.
Jamie Dimon has led US banks in fighting the proposed Volcker Rule, which would ban so-called proprietary trading, when banks trade on their own accounts. Banks are also resisting curbs on their hedging activities.
Dimon told US network NBC's "Meet the Press" programme that the big loss incurred by the New York-based bank, which triggered a slide in banking shares on Friday, was "stupid" and damaging, but not bad enough to stop the company from making a profit this quarter.
Asked if JPMorgan's losses had given regulators new ammunition to clamp down on Wall Street after the US government spent billions to bail out financial institutions during the 2008 crisis, Dimon replied: "Yes, absolutely. This is a very unfortunate and inopportune time to have had this kind of mistake."
Martin Hennecke, associate director at Hong Kong-based financial advisory firm Tyche Group, told Al Jazeera that JPMorgan's loss was another indictment of the US banking system.
"We are particularly not fond of the US banking industry, which is like a casino gambling industry, especially since the Glass-Steagall Act was repudiated," he said, referring to the 1933 legislation established to regulate and limit speculation by banks which was repealed in 1999.
"The Glass-Steagall Act needs to be implemented again, otherwise it seems the banks pretty much do what they want.
"If they mess it up they get a bailout and if they do it right they don't care about what limits were broken, and so they would all be heroes and get huge payouts and bonuses."
Hennecke said: "So, we don't think the US banking industry is safe or stable to invest in. The much chastised Chinese banks that everybody loves to hate are much safer to invest in than banks in the US and Europe as well for that matter."
Top officer quits
Meanwhile, Ina Drew, JP Morgan Chase's chief investment officer, has announced her retirement in the wake of the loss, with two more senior execuitves expected to quit the company.
Drew is "retiring" after more than 30 years at the bank, JPMorgan said, but her departure came days after the bank reported a huge "egregious" loss that came under her responsibility at the bank's chief investment officer (CIO).
The Wall Street Journal said two other high-ranking executives were set to leave during the week: Achilles Macris, who heads the London-based desk that placed the trades, and trader Javier Martin-Artajo, a managing director on Macris' team.
London-based trader Bruno Michel Iksil, nicknamed "The London Whale" for the large positions he took in credit markets, is also likely to leave though it remains uncertain when he will do so, the Journal said.
|< Prev||Next >|
Other articles in Americas
NASA astronauts fix pump in spacewalk 25 December 2013
NASA astronauts make Christmas Eve spacewalk 24 December 2013
Former Argentina president cleared of bribery 24 December 2013
Snowden declares 'mission accomplished' 24 December 2013
US wants Iran deal to have sanctions triggers 23 December 2013
US 'helped kill Colombia rebel leaders' 23 December 2013
Cuban president warns local entrepreneurs 22 December 2013
Astronauts begin spacewalk to repair ISS 21 December 2013
US judge strikes down Utah's gay marriage ban 21 December 2013
Bin Laden's son-in-law faces new charges 21 December 2013
|William A. Cook|