This week, The New York Times reported that JPMorgan Chase could lose up to $9 billion on a single trade, a huge escalation from the already-massive $2 billion that CEO Jamie Dimon had initially estimated. When the botched trade was first disclosed in May, it stoked fears that Wall Street banks were engaging in the type of casino-style risk-taking that brought the financial system to its knees in 2008. But Dimon insisted — notably during two congressional hearings — that the trade was an isolated incident and that Main Street had nothing to fear. Now, the latest report from The Times casts doubt on that claim, with one former banking regulator telling the paper, "Essentially, JPMorgan has been operating a hedge fund" with the money in its customers' checking accounts. Is this proof that JPMorgan is a threat to the economy?
Yes. JPMorgan is a disaster waiting to happen: JPMorgan's swelling loss underscores the fact that "the banking industry has become its own worst enemy," says Doug Kass at The Street. JPMorgan has engaged in a "relentless abuse of power and the aggressive use of client deposits in risk-taking strategies" that can only be curbed by tough government regulation. A financial industry that has "grown too influential by virtue (or lack thereof) of its nearly unlimited powers" could be deadly to the economy.
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