Washington, DC- Oregon’s Senator Jeff Merkley, cosponsor of the Merkley-Levin provision in Dodd-Frank that put into law the Volcker Rule, issued the following statement after news that J.P. Morgan lost at least $2 billion in portfolio hedging trades made by their risk management division.
“What yesterday’s announcement makes abundantly clear is that even J.P. Morgan, supposedly the best risk manager on Wall Street, can make bets that go spectacularly wrong. This is exactly why the banks that our businesses and families depend for loans should not be in the hedge fund business.
“Moreover, it is essential that bank regulators issue rules that do not permit hedge fund investments by Wall Street banks to be disguised as ‘market making’ or ‘risk mitigation,’ as this case so dramatically demonstrates.
“I ask, once again, that regulators implement without delay a Volcker Rule as intended by Congress, with a clear, effective firewall between hedge fund-like trading and traditional banking.
“American families and businesses should not be subsidizing these types of risks or victimized by these types of losses. We need a wholesale change of culture at our banks and at our regulatory agencies, which is precisely what the Volcker Rule firewall is intended to create.”
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