JPMorgan losses a headache for Romney?
- 11 May 2012
- From the section US & Canada
The London whale has made a big splash that's likely to create waves in the presidential election.
JPMorgan lost $2bn (£1.2bn), and its outspoken chairman Jamie Dimon has lost some political credibility. He's been at the forefront of the argument against the Obama administration's attempt to bring in tighter financial regulation.
In particular he's trying to fight off the "Volcker rule", named after Paul Volcker, the former chairman of the Federal Reserve. It stops banks from investing in hedge funds.
Mr Dimon was winning. Now his company's huge losses strengthen the hand of those arguing in favour of the new regulations and leaves Mr Dimon looking slightly foolish, although some say the Volcker rule wouldn't have had any impact in this case.
This plays into November's elections because one of Mitt Romney's central arguments is that President Obama has tangled the economy up in red tape.
Financial regulation is at the heart of that argument. Republicans have been ferocious in their opposition to the new rules on banks.
I can't find any specific comment Mitt Romney has made on the Volcker rule, but it is part of the new regulations on Wall Street made by the Dodd-Frank Act, which he has promised to repeal.
Mr Romney's website says that this law is "a quantum increase in the scale of the regulatory burden on the American economy".
Although quantum doesn't mean "big", I think that's what the Romney team meant. The promise is to repeal Dodd-Frank and replace it with a "streamlined, modern regulatory framework".
That could, of course, include something like the Volcker rule. But that would only blur his attack, and be controversial with Republicans.
All sorts of good arguments can be made on the other side, but many Americans are likely to see the JPMorgan debacle as demonstrating the need for tougher rules. It blunts Romney's offensive against red tape.
JPMorgan's loss could be Obama's gain.