Stronger Wall Street Regulation Is Needed

“Unless you run a financial institution whose business model is built on cheating consumers, or making risky bets that could damage the whole economy, you have nothing to fear from Wall Street reform.” 

Those are the words of President Obama in asking for stronger Wall Street regulation. The need for this reform was highlighted recently by JPMorgan Chase's recent loss in the stock market of somewhere between $2 billion and $3 billion dollars. This loss was probably not enough to put the giant bank in danger of failure, but it could have if the loss had been bigger (like what happened to some investment/banks when the market crashed only a few years ago).

Why should taxpayers care about what happens to a giant Wall Street bank like JPMorgan Chase? Because banks are backed by U.S. government money -- taxpayer money. If the giant bank gambled away enough of its depositor's money to put itself in danger of failing, the government would be obligated to step in and bail them out -- with taxpayer money.

The recent Wall Street reform included something called the "Volcker Rule". Government is still in the process of trying to write the final version of this rule. The president wants a strong version of this rule, and the Wall Street banks want it to be very weak (with lots of loopholes they can dance through) -- and the banks are spending millions of lobbying dollars to weaken the rule.

What is the Volcker Rule? The rule was originally intended to keep a bank from making the same kind of risky investments that investment firms make. The difference is that the investment firm is playing with its own money (and that of its investors), and if it fails they are the only losers. The bank is playing with depositor's money (money that was put in that bank to be safe, not to be invested in risky stock market ventures), and if the bank fails, the losers are depositors and taxpayers (who legally are required to bail out the bank). Here is how Volcker himself puts it:

“You’ve got great advantages if you’re a government regulated bank. Take the two big remaining investment banks — used to call them investment banks — Goldman Sachs and Morgan Stanley. Both during the crisis got a banking license. Why’d they get a banking license? They wanted the protection of the government in the middle of the crisis. Now the crisis is over, if they want to do proprietary trading, they want to do a lot of other things, it’s very simple: give up their banking license.” 

I have no problem with anyone making risky bets on Wall Street, but it should not be done with depositor money, and the taxpayers should not have to pay for any bad gambles made. This is why the Volcker Rule is needed, and why it should be written as strongly as possible -- with no loopholes. If the Wall Street one-percenters want to gamble, they should have to do it with their own money.

Of course Willard Mitt Romney (aka Wall Street Willie) doesn't agree. He would like to see the Volcker Rule completely eliminated, and all of Obama's Wall Street reforms overturned. He doesn't care about depositors, taxpayers, or any Americans except his rich buddies on Wall Street. That's why the top six donors to Romney are from the biggest six Wall Street banks -- Goldman Sachs, JPMorgan Chase, Bank of America, Morgan Stanley, Credit Suisse, and Citigroup.

President Obama wants to try to protect creditors and taxpayers. Willard Mitt Romney (aka Wall Street Willie) doesn't -- he would put them at the mercy of the giant Wall Street banks. It might make sense to vote for Romney if you're in the privileged 1%, but it would be crazy for anyone in the 99% to vote for him (or any other Republican).