Investment banks are not casinos and none should be too big too fail. If a company is too big to fail,thefederal anti-trust people have been asleep at the switch.
Let JP Morgan fail and go through bankruptcy.
Jamie Dimon was the biggest proponent for creating a loophole to the Volcker rule. The rule was designed by Congress to limit proprietary trading that may sink JPMorgan.
It was the efforts of Dimon and his staffers created a loophole in the law.
Dimon used his reputation as a Washington operator and the fact the JPMorgan came through the Wall Street financial crises intact to push for proprietary "portfolio hedging."
Senator Carl Levin, one of the architects of the Volcker Rule, said this:
Those (JP Morgan) efforts produced a big enough loophole that a Mack truck could drive right through it.
The loophole is known as portfolio hedging, a risky strategy that essentially allows banks to view an investment portfolio as a whole and take broad actions to offset the risks of the entire portfolio.
As Sen. Levin noted:
(Portfolio hedging) is a license to do pretty much anything.
The traditional definition of hedging, matches an individual security or trading position with an inversely related investment. Thus, when one goes up, the other goes down.
