Losses announced by JPMorgan Chase last week have raised again unsettling question of whether the TBTF (too big to fail) banks have too much power and whether and how they should be cut down to size. More disturbing, the losses raise questions of whether global financial authorities have the knowledge or the understanding of what is going on to do their regulatory jobs properly.
The biggest and toughest questions should be addressed to politicians, especially the US Congress and President Barack Obama: do they have the guts to stand up for the public against the big bankers? Or have they, wittingly or unwittingly, sold out to the insidious power of Big Bucks?
This humiliating announcement of losses could not have happened to a more appropriate guy, given how hard and hardball Jamie Dimon, JPMorgan's chief executive, has played the game against tougher banking regulations.
Yet here he was admitting losses of US$2 billion. The bank lost a heftier US$15 billion in market value and a notch in its credit ratings after admitting the losses.
The important point is that these were not losses by some 'rogue trader', but were central to the bank's strategy and occurred under JPMorgan's chief investment office.
As Nils Pratley wrote in The Guardian: 'This was a failure at mission control.'