It means a lot to me that Jamie Dimon thinks this loss is stupid, avoidable and while no Volker rule had been broken, it broke the Jamie Dimon rule. There is a lot of talk that more regulation is needed. If Wall Street had understood their operations and shown the discipline described by Gillian Tett in her book Fools Gold about the J P Morgan group that initially developed many of the financial exotica out there, then there would not have been a 2008 financial crisis. What Jamie has to ask is what caused that discipline to falter recently?
Wall Street currently lobbies Washington against regulation making derivatives more transparent as if the obscure system in place is a sure money maker when actually it's a loser. Any bank that thinks its trading desk is adding value for its shareholders is deluding itself and does not deserve consideration as an investment. The juice has been worked out of the system. Today's bank proprietary desks are practicing financial masturbation. Making some heat but no issue. I think the Jeremy Irons character in the movie Margin Call had it right when he said, "I don't hear the music."
TEPCO the Japanese utility with the disastrous failure of its nuclear reactors is an example of a private entity currying favors from regulators in the name of increasing shareholder value. The result is a total wipeout for shareholders and a staggering burden for Japan. The investment community ought to consider bank's who want to do proprietary trading as entities destined for a total wipe out, just like TEPCO. Regulation is sure to come, but investors should leave the TBTF banks to benign neglect because they are losers, with a capital L on their foreheads.
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