In The Battle For Financial Regulations, Reformers Gain The Upper Hand

by Jack Kelly on May 15, 2012

Battle over regulatory reformA battle over the fate of the Volcker Rule has been raging for the past several years. On one side are the mostly Democratic politicians and regulators. On the other side are Wall Street Executives, lobbyists and certain Republicans.

This battle has become a war for control of the Street. Wall Street spent and pushed hard to fend off perceived threats of Dodd Frank turning into a healthcare-like reform which would transform the epicenter of capitalism into a socialistic ward of the state.

JP Morgan CEO Jamie Dimon was at the forefront of the attack on new regulations. Mr. Dimon, up until last week, was considered the paragon of virtue, leadership and risk management. He was openly dismissive of regulations and regulators, chastising their attempts as misguided and costly. He claimed that the Volcker rule’s regulations would adversely impact the financial industry.

Mr. Dimon and the anti-regulations forces seemed to be winning the battle. The Vocker Rule was pushed back to 2014, Securities and Exchange Commission budgets were fought against, and two years later we are still waiting for the implementation many of the new requirements.

The recent $2 billion plus trading loss fiasco at JPMorgan Chase may change the battle.  The eye-opening loss, accompanied by admonitions of poor oversight, has reawakened and reinvigorated calls for tighter controls and oversight of Wall Street.

The Associated Press has an interesting piece summarizing the regulatory changes that may be affected by JPMorgan’s $2 billion trading loss. They are:

1. The Volcker Rule

2. Ending ‘To Big To Fail’

3. Regulating Derivatives

4. Bank Oversight

Check out the AP story for more details. Do you think JPMorgan’s $2 billion loss will give regulatory reformers the push they need to crack down on the banks?

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