J.P. Morgan just lost $39 billion. The Senate Banking Committee wants to know why.
Jamie Dimon, Wall Street's darling CEO, presented his defense: plausible deniability. He was advised by his staff to not unwind risky positions, even though they started to show big losses.
Can any financial sector executive claim they fully understand the risks of their complex investments? We all know the answer is no. It's been proven over and over again.
Think about what this means. Bank CEOs who do not eliminate these mysterious, huge risks are not acting responsibly. They have no ethical claim to plausible deniability.
The financial sector is trapped in a game of chicken. Huge CEO egos are involved. They have built fancy, souped-up cars with other people's money. And they are driving by remote control: if the cars crash, they don't get hurt. So nobody backs down.
All four large banks must simultaneously retreat to pre-Gramm-Leach-Bliley risk levels. Since the banks won't self-regulate, we need to re-post the speed limits. Gramm-Leach-Bliley eliminated speed limits, and all but a few of us lost. How long are we going to let this game of chicken last?