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AEI Scholar Paul Atkins on why J.P. Morgan’s losses are an issue between the bank and its shareholders, not the government.
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Focus tonight JPMorgan Chase the Commodity Futures Trading Commission reportedly issuing subpoenas JPMorgan over its two billion dollar trading loss.
This is adding to CEO Jamie diamonds travels as he gears up to testify before congress later this month.
With more Paul Atkins a scholar at the American enterprise institute and a former commissioner of the securities and exchange commission and a Fella you know answered thing or two about the rules regarding this Paul welcome back to show great to have you here.
We think -- come out of this testimony will we learn anything new.
But -- we'll see.
I mean I -- -- know any thing come about.
Particular issue of course on what absent the paper.
But I imagine we'll be questions about risk management and and what's happened on the inside and to the extent that.
CEO JPMorgan.
We'll talk about that I guess -- learn something.
But I think what's most troubling is that.
You know this whole thing becomes sort of a an issue for the federal government and congress so to look into.
You have a bank that maybe made some mistakes and and lost money but that's really an issue between the shareholders.
And the management of the bank rather than well government to -- -- -- you know a lot of people make that point.
That looking and they -- losses and -- that big of a loss from their point of view.
But I I think the reason it's so troubling especially to taxpayers.
Is that this is reminiscent of 2008 it reminds you of the fat.
The banks can have big losses and in a heartbeat at an even when you might not expect it you know it's it's not as -- we're in the Great Depression right now right so.
I think people are upset because they realize 2008 could happen all over again and this time the federal government is broke how do you respond to that.
Well I mean you have to look at the markets markets are volatile and despite all the talk of administration and others about.
Trying to make them stable and and make the financial state of the system stable.
We -- -- Lee not that way because people aren't stable people are driven by emotions and other things and they make mistakes.
So here though at least the mistake was cabin.
The bank has the capital to meet it and so it really is an issue between the shareholders and there are -- and management.
And other problem that I think Dodd-Frank of this statute that was.
Enacted to try to combat.
Some of the perceived.
Problems coming out of 2008.
Financial crisis.
The probable that is that just further ensconced there was this whole idea of too big to fail and so that's I think what people -- So little crap that they are upset about that when I get it diet.
You know the CF TCE remission government involvement they're really getting involved here because under Dodd-Frank they have more powers.
I am I taking your not a fan of that and you and you probably think they're going -- -- there will be looking -- emails.
To see if there was -- in the lying if there's any changing -- stories.
-- -- -- Well I mean -- they have there enforcement and investigatory.
Powers so.
You know they're acting within that than if they think the suspect something or wanted to check it out I think that's we'll -- -- -- authority.
Want to talk to you about FaceBook because I find this story chest fascinating.
And and especially -- how badly it was happen handled the fact that the company is having problems.
You know even now after the shares have been issued.
I believe the close tonight at 2772.
Which is you know well below the high hit on that first day of trading should something different have been done what went wrong -- Who's at fault and -- or should we just say this is the way the IPO market works and it certainly individual investor should stay away.
Well you know the equity markets are risky so -- especially.
Very -- -- Offering like that brings all sorts of red flags.
To warn people so it really look before you we look before you -- As if you're driven by headlines driven by emotion you know you can.
I come to -- pain in the end.
And so here you know I I obviously don't know what went on -- behind the scenes in.
As underwriters of built their book can and worked.
Worked in that area and then what company was looking for as far as their price but.
Clearly they at least had some kind of book that they built in some demand.
And unfortunately of course and it didn't come out the way they expected.
In the way usually I -- come out fears they come out at a particular price and then there's a pop.
Rich.
You know you know people -- apple -- and others right.
I know and we weren't people opt out what it did not look like it was going to be pretty Paul thanks for coming on tonight appreciate your helping your expertise apt pleasure speaking to you thank you it.
