Regulations didn't Stop MF Global or JPMorgan Losses - Granite Grok

Regulations didn’t Stop MF Global or JPMorgan Losses

JP Morgan earned a $5.4 billion profit in the first quarter of 2012.  It is on course for making a multibillion profit in 2Q2012 and a $20 plus  billion profit for the year despite its recent $2 billion loss.  Businesses  take risks, and some risks do not work out.  Businesses are at risk daily  as they must win enough willing and able customers so companies can pay employees, taxes, fees, and other expenses.

This JPMorgan loss has again kicked off liberal demands for even more regulations on an already highly regulated industry.  How are regulators  supposed to prevent losses from business risks?  Businesses like banks are in the business of risking money.  To keep banks from taking risks, you must stop them from making loans.

None of the current regulations and regulators, e.g., SEC, FED, FDIC, Sarbanes Oxley, Dodd-Frank, and many many others, didn’t stop this  loss.  They didn’t stop the MF Global loss.  Bernie Madoff was registered with the SEC which didn’t stop that fraud.  The FED had responsibility for the NY Banking system, but it didn’t warn of or prevent the housing credit crisis.

It is silly to think that a few more regulators or regulations will prevent losses.  The purpose of more banking regulations is to provide more high-paying, do nothing jobs and to provide political control over an essential industry allowing rewards for friends and punishments for political enemies.

The JPMorgan loss has no similarity to the MF Global loss.   The JP Morgan loss was in its own account, not a penny of client money was lost or at risk and JP Morgan has opened its books for investigation.  The MF Global loss was reported to be $1.6 billion of misappropriated client money.  Could the reason the slow investigation of the MF Global loss be because the head of MF Global was former Democrat Senator, Democrat Governor of New Jersey and multi-million dollar Obama fund-raiser John Corzine?

Business is risky.  No amount of regulation will prevent all business risks unless they end business.  But, regulations add costs which make US businesses less competitive compared to foreign companies.  Regulations give a false sense of security to investors who think regulators are eliminating risks.  And, the more regulations and regulators the more politicians seem to think that the public has an obligation to protect investors from losses.

What America needs is more competition, fewer regulations, more personal civil and criminal responsibility by executives for the success and losses of their businesses, and the end of all subsidies, loan guarantees, and bailouts for private companies and industries.

PS.  In January California estimated that its deficit was $9.2 billion.  Now the deficit turns out to be $16 billion.  Perhaps all the regulations created for business are just mis-applied, they should apply to government finances, not business.

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