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Former Lehman Brothers executive Larry McDonald on concerns over-regulation could hurt the financial sector as well as investors.
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We have the widest best deepest and most transparent capital markets the world.
The capital markets of America are part of the great American economic -- -- We have the best in the world we had some problems we should recognize that the best -- -- for the -- of the fourth best quarter.
That was JPMorgan CEO Jamie Dimon no warning senators about over regulation on Capitol Hill today -- we have a trader and former Lehman Brothers executive has has regulation on his business.
Could cause major damage for the banks and retail investors.
I'm surprised if you Larry -- -- -- -- report -- senior director at new edge but you would be author of this book a colossal failure of common sense.
Everybody should read this and you really want to understand what is at the heart of Lehman falling apart it's a brilliant at that moment by moment to kind of catching your breath.
I guess explanation of what happened but.
You know what surprises me that somebody like you would say -- -- leave these guys alone and everything will be fine -- we've seen the results of something like.
My name theory of my book is really tell all about prop trading as to -- three types there's really one bad type.
When investment bankers do deals say mortgages OK they typically can -- them if they can't -- Lehman Brothers they pile up in the balance sheets.
Even ended up with a 120 billion.
Of mortgages they couldn't sell -- try to hedge them.
That was the deadly knockout -- that's a bad form a prop trading.
What -- -- Jamie that would JPMorgan is doing really get a better performance -- if your bank your long a lot of loans.
You're entitled to hedge some of those consumer loans.
It was just have a trade that went bad but I'm -- I'm really worried about the Volcker Rule that I really wanted to go after the bad prop trading and not the good but the prime.
Problem -- as we have had regulation up.
Did people say that the that we had no regulation before there it that's flying in the face of all the evidence of all the new -- sarbanes Oxley on.
We keep.
Piling on these regulations and they don't seem to do any good the one regulation and I would look at.
That we got rid of back during the the Clinton administration at that maybe we should -- at its Glass-Steagall.
The thing that gives these investment gives wall streeters should be -- look at it bet on anything they want so long as they take the loss along as my tax dollars are not gonna back up those -- It's.
I'm a really interesting guest to have on because I trade bonds in 20072006.
And leaving 2008 and I trade -- today the traders around the street that I work with and myself.
We have -- we -- -- -- the amount of balance sheet risk.
But it's it's like night and day traders -- crossing bonds.
Back in 2007 I could take down a 100000020.
Million -- any kind of want to hold them for a week or two then sell them I can't do that today it's like night and day.
But I'm really worried about investors watching -- right again I'm not worried about investors investors make their bets and they have to live with -- -- I'm worried about our taxpayers who didn't make the -- who shouldn't be forced to put -- their money their guarantees behind these -- well when I'm really -- liquidity -- let's just say you wound up a mutual fund.
Those mutual funds -- need.
Dealers to make markets so Fidelity the T.
Rowe Price of the world they need.
The street student buy and sell bonds in without capital if the vocal rules too aggressive it'll make that process a lot more difficult -- -- make.
Actually -- bonds -- the buy side the mutual -- more expensive so what do Jaime diamonds testimony today due to either dial back or hype up the Volcker Rule.
Well I mean really it's over the top I mean I think at this point so much -- already been done in their focusing on.
On on something that's really putting a microscope on one company.
This Meehan is really hall of same risk taker -- the last like 89 years on Wall Street is one of the greats of all time.
But he had a bad can a couple of months everybody's entitled to it there unfortunately a lot of -- being.
Paid right now to this when they really should we look at the Volcker Rule of how to make it perfect what you believe by the way when he said he -- know what the Volcker Rule was.
I think in the face diving I -- -- his translation was he didn't know.
How the Volcker Rule would really impact as if he doesn't you can bet none of those senators did anyway Larry -- -- deceive and I think my.
