According to JPMorgan Chase CEO Jamie Dimon, the recovery has stalled because of strict banking regulation.
I'm not making this up.
At a financial conference today, Dimon told Fed chief Ben Bernanke there's no longer any reason to crack down on Wall Street. "Most of the bad actors are gone," he said. "[O]ff-balance-sheet businesses are virtually obliterated... money market funds are far more transparent" and "most very exotic derivatives are gone."
Dimon said he worried that financial reform legislation is "holding us back at this point" from a stronger economy.
Someone should remind Dimon that a few years ago, before any stricter regulation or oversight went into effect, he and his colleagues on the Street almost eviscerated the American economy. Remember, Jamie? The Street's antics required a giant taxpayer-funded bailout.
JPMorgan Chase and the other giant banks on Wall Street are bigger than they were before. And now they're certain they're too big to fail. Without far stricter regulation they have every incentive to repeat their binge.
Dimon believes most of the bad actors are gone. To the contrary, none of the truly bad actors has been prosecuted. In fact, most are making more money than ever before.
Off budget businesses obliterated? Funds more transparent? Exotic derivatives gone? Dimon still doesn't get it. The only reason there's been any progress at all to date is because rules have been tightened and regulators are more vigilant. But at this very moment the banks -- including JPMorgan Chase -- are lobbying heavily to relax the rules so they can return to their old ways.
The recovery has stalled because most Americans are still in the gravitational pull of the recession -- unable and unwilling to buy enough to keep the economy going. And that's largely because the terrible consequences of what Dimon et al did to the economy are still being felt by most Americans.
On what planet has Jamie Dimon been living?
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
If people want banks to change, they need to change their bank. A massive defection by ordinary, small account Americans would bring the banks to heel. Move your money to local banks and credit unions. Many reimburse you for ATM fees in acknowledgement of their limited reach. We need to stop begging the administration and the congress to protect us, they are in the tank for the banks. We have to do that ourselves and the best way is to stop doing business with those that would destroy us.
And REMICS still have not been opened and investigated. Is this going to be the fraud that just keeps on going .....Are American investors still supposed to keep investing in mortgage backed securities that are not mortgage backed, and using these REMICS as tax deferred write offs, while earthlings continue to be foreclosed on by Trusts it's impossible for them to be in, and robo signed mortgage assignments so their default insurance can be put into these REMICS instead?
Obama famously declared that he was the only one that stood between them and the pitchforks. If we have to the pitchforks on Obama to get to these guys, so be it. There is nothing more clear, the Reagan notion of too much regulation has failed.
The breaking point is coming soon: businesses who survived the economic turndown are getting seriously backlogged. If they don't hire soon, they will start losing customers.
How about the bank of Enron, Bernie Madoff, and the one who ripped off the city of Birmingham, AL.
That's right Chase, the biggest bad actor, the Mel Gibson of banking is still starring in the movie.
You might think that's outrageous, but I think that would just level the playing field.
After all, Jamie and his ilk pick our pockets all day long. A little turnabout would be fair play. Who's in?
If Obama would shake up his economic team and add a couple figures like Reich and Stiglitz:
- he would have a shot at actually turning the economy around.
- he would reinvigorate his base, who he's gonna need as foot soldiers over the next 17 months.
- and he would be able to make a new case for hope on the economy with 2012 looming and a very tough case to make.
It's a win-win-win.
What an insult he is.
Thank you Robert Reich.