MORNING MESSAGE: Make Banking SAFE
OurFuture.org's Isaiah J. Poole: "SAFE (Safe, Accountable, Fair and Efficient) Banking Act sponsors Sen. Sherrod Brown and Rep. Keith Ellison are featured speakers at the June 18-20 Take Back the American Dream conference. (Click here to register.) Their bill would put firm limits on how big any bank can get. Among the provisions are that no bank could hold more than 10 percent of all of the insured bank deposits in the country, nor could a bank holding company have non-deposit liabilities greater than 2 percent of the nation's gross domestic product. By the standards in the SAFE Banking Act, four existing banks are currently above the size cap—JPMorgan Chase, Bank of America, Citigroup and Wells Fargo—and would have to shrink. This would be a major step in making banking sober—and boring, as it should be—again. Click here to tell Congress: Break up the big banks!
JPMorgan Chase Losses Grow
JPMorgan Chase's losses appear to grow. NYT: "The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses. When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress..."
Dimon won't admit he's prop trading. Bloomberg: "JPMorgan’s loss, though, shows that prop trading is still going on under a different guise and just as aggressively as ever. That may be the most important takeaway from this episode. In Dimon’s reality-distortion field, JPMorgan’s enormous bets weren’t anything like prop trading. The bank’s chief investment office in London was just hedging -- namely, trying to reduce the firm’s risk by putting on one position to neutralize an opposite position elsewhere in the portfolio. Hedging is permitted under the Volcker rule. This hedge, Dimon said, just happened to go bad. JPMorgan’s own words and actions belie that explanation."
Banking needs more than the Volcker rule, it needs more Volckers, argues W. Post's Harold Meyerson: "Rumpled and unglamorous, Volcker personified banking before big money gave it glitz. He implicitly threatened to drag it back to the days when Wall Streeters occasionally had to hail their own cabs ... if Dimon’s bank and others like it are not to periodically blow themselves up — taking the economy down with them — they’ll have to be made smaller, safer and less dashing."
No More Hostages
President Obama and Sen. Maj. Leader Reid tell Speaker Boehner, no more hostage taking. NYT: "...Mr. Boehner initiated the hostilities on Tuesday, when he appeared to signal that he wanted to start scrapping over the debt ceiling this summer, in the middle of the election campaign, instead of at year’s end, when the country will again need to raise the borrowing limit ... 'The president made clear that we’re not going to recreate the debt ceiling debacle of last August,' said Jay Carney, the White House press secretary ... Mr. Reid reminded ... that 'absent a balanced agreement that pairs smart spending cuts with revenue measures asking millionaires to pay their fair share, the debt will be dealt with through the sequester.' That is a reference to a previous agreement that would automatically cut $1.2 trillion in spending, with half taken out of military spending and half from domestic spending."
Conservative budgets fail in Senate vote. Politico: "...the House Republican budget ... failed on a 41-58 roll call with five Republicans joining all Democrats in voting no ... Three other budget blueprints, offered by tea-party Sens. Pat Toomey, Mike Lee and Rand Paul, also were rejected in lopsided votes ... For a third straight year, Senate Democrats refused to offer a budget resolution of their own ... Democrats argued that no budget is needed since spending levels were already set by last summer’s bipartisan debt deal."
Republicans voted for budgets that doubled student loan rates, reports TPM.
House GOP Votes For VAWA Gridlock
House passes conservative version of Violence Against Women Act, forcing gridlock. NYT: "...the House passed a Republican bill on Wednesday to combat violence against women, over objections from President Obama and other Democrats, who said it would reduce protections for many battered women, including lesbians, American Indians and illegal immigrants ... Twenty-three Republicans joined 182 Democrats in voting against the bill."
House VAWA bill makes it harder for the undocumented to report crimes. USA Today: "... some GOP strategists worry that it could further hurt the party's standing with Hispanics..."
Breakfast Sides
House GOP prepares for Supreme Court health care ruling. Politico: "If the law is upheld, Republicans will take to the floor to tear out its most controversial pieces, such as the individual mandate and requirements that employers provide insurance or face fines. If the law is partially or fully overturned they’ll draw up bills to keep the popular, consumer-friendly portions in place — like allowing adult children to remain on parents’ health care plans until age 26 ... [But] Republicans could run into resistance from conservatives, who want to repeal the entire health care law and leave nothing in its place."
Chancellor Merkel suggests Germany may be open to stimulus for Greece. NYT: "'I have the will, the determination to keep Greece in the euro zone,' she said in an interview on CNBC on Wednesday, in what appeared to be an attempt to relax an increasingly tense situation. If Greek officials are looking for 'stimulus to be pursued for growth in the euro zone, which we could pursue in the interest of Greece, we’re open for this,' Ms. Merkel said. 'Germany is open for this.'"
