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Former SEC Chairman Richard Breeden on calls for further regulations after J.P. Morgan’s losses.
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I think now our our regulators are testifying before the senate today over the two billion dollar loss of JPMorgan.
We have a former SEC chair but he says more regulations are not what we need right now to fix things Richard Breeden.
It's now the current chairman of Breeden capital management and he joins us.
In this exclusive gonna see mister Breeden thanks for coming yeah.
I'm going to be here so is it really funny after offers what JPMorgan recovered a -- today have recovered almost 5% said the saarc did.
And it just makes you wonder whether it's really the SEC -- job to regulate what may be good or bad trades which is apparently what this -- Well now it's certainly not the SEC's job dead and that is that these supervision.
Of a large bank holding company.
-- like JPMorgan is the responsibility of the Federal Reserve and war.
The Comptroller of the Currency Office so.
Will the bank regulators are the ones who -- supposed to be evaluating whether institutions are doing anything anything at all that is unsafe and unsound.
Idea bottom line is there they have to make sure that bets are covered in the pets can be covered otherwise we could have a a cascade of things affecting the whole financial -- -- but that was never in question with a JPMorgan trade wasn't.
I don't think so and I I think that the first.
First principle here -- says we ought to look before we leave.
And it's perfectly good for congress to ask some questions find out what the regulators.
Now about the situation.
-- on the bank knows but.
Now -- two million dollar loss storage JPMorgan while painful.
Is is not some things that risks the solvency.
Of the institutions got planning a capital.
And liquidity in planning earnings sorrow you know there are some questions that need to be asked about.
About their internal practices and how good -- how well they manage risk and are prudent they are.
But in a week we need to get the facts before we start diving in with new regular.
Now there's a common refrain that that the reason that we had this financial crisis was because.
We deregulated.
Terribly in the two thousands leading up to the financial crisis.
But I went back and looked at all of the regulations.
You start with sarbanes Oxley go on from there.
We actually had a lot of -- that the only really deregulatory financial act.
Was getting rid of the Glass-Steagall and that was done under the Clinton administration correct.
-- site at my hunch is David if you added up all the pages.
Bank regulation in -- motive.
Federal regulations that in a decade leading up to of the financial.
Crisis.
It expanded rather -- that begs a question forgive me for opting out whether or not regulations.
Are -- cure for what -- the financial industry.
We we need more market disciplines and fewer regulatory programs that when you need them don't seem to work.
And I think it's very clear that in the run up to the financial crisis.
Part of -- the biggest part of the problem was that regulators allowed banks to be too highly levered.
And regulators allowed securities firms to be too highly levered.
So yes we need higher capital rules but.
It's a -- I think in hands and not documented that somehow there was broader deregulation.
That brought on the crisis it was just plain old leverage so bottom line areas -- start now with with a new regulatory authority Dodd-Frank bill what do we know what it what are we to what Dodd-Frank.
I'm repealing it would be kind -- is -- we ought to consider.
I'm not all of that there -- some good provisions in Dodd-Frank I don't think you can say that everything in there is bad but.
But there is some provisions for example there's a provision that says the bank regulators are supposed to define.
Companies that aren't banks that are systemically important and then regulate them as if they are banks so FaceBook or Google or who knows them.
We'll be com a regulated like the bank and that that's -- horrible mistake he won't work.
If if the Fed and OCC couldn't find these -- inside JPMorgan which they now intimately.
How are they gonna smell -- all the risks in any big company in America is -- -- mean that's a fool's errand and you know we ought to focus on having banks have adequate capital adequate liquidity and good diversification.
Just the basic building blocks of prudent.
It's Richard Breeden former SEC chairman of breath of fresh air thank you very much for coming in appreciate it back.
Thanks very much.
