You're watching...
Money Morning Editor Shah Gilani on regulators missing the bank’s losses and if it will impact the economy.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
These banks the -- -- Vatican this huge trading loss of course it keeping morning.
Rattling the banking sector in our next guest says this just another example showing the banks still have liabilities we don't know about.
So the lining here that on CE.
And -- morning editor I'm glad you're here you know -- you just said it -- we just had the stress tests.
Where were the regulators spray and what's going on now why didn't they pick up on this and it was it the fact that JPMorgan actually -- this lost prior to the stress tests being revealed.
The things we don't -- hopefully we'll come out but rather frightening.
OK let's and the scale that that we're looking -- I think your point is a really good when I mean we have these regulators.
Regulating things being truly don't understand so maybe you don't even know what to look.
-- I think that's a big part of the problem.
When they look at what they're banks actually given the banks given their -- models and they can change inputs in the actual models -- the use.
To measure risk and that's a problem because right they don't always know what that I was comparing apples to apples when they're comparing bank to bank.
And certainly when they're looking at modeled they don't really know what the input -- those can actually change before they're looking at and making a determination -- Is JPMorgan.
Change by the -- because -- Jason Weisberg just -- its trading in -- you make you win some you lose some you have to answer to shareholders.
It's trading for sure and -- with let's make that clear they call an economic hedge.
I call -- for what it is is really.
But it's a -- trade that's what it was they called this economic hedge which means they basically take their whole book.
Across the bank across all the trading desks of the bank and they want to hedge that risk.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- OK so.
We are at a point -- anywhere saying the economy might be turning -- getting a little better -- -- this happens does this set us back.
No I don't think it -- the economy back I think the congress probably going to struggle will be here anyway.
But I don't think this has any relevance to the economy I think it has relevance obviously to regulation in terms of the future.
As a -- obviously repercussions in the political world in terms of -- election coming up in the fight this going to occur over regulation and direction.
Of the economy based on are we over regulate -- and I think that discussion will be front and center now.
You know it it evidently one of -- -- bank system you know are seen Michigan set a sentiment consumers' confidence sentiment survey comes out.
We're at a four year high he cut would never know about.
We don't see anything that everything today's -- -- -- take this morning this afternoon this night this week and it's going to be all about that.
We've missed economic data coming out of China which was import we've missed a lot of things so far but.
These these headlines will pass it will get to look at the world again and find out that things are bit models.
And what so what keeps you have a -- and as far as this market goes.
What keeps me up I think is primarily Europe really what's going on in Europe because the contagion possibilities are manifest and then.
We seem to think and there are a lot of folks that are saying that we have -- the US has decouple from from Europe and from the global economy that's impossible it hasn't it won't ever.
We are now one large economic family -- and what happens over here affects what's happened is that and you see is down this summer and up into the election.
I -- as having very typical summer.
It's -- -- China -- -- the comfort and we're here.
And he's.
