William Black on JP Morgan and the Failure to Regulate Wall Street Fraud

Welcome to Capital Account. Regulators from the CFTC and the SEC (Gary Gensler and Mary Schapiro) were on Capitol Hill today to talk about how the overhaul of that multi-trillion dollar, opaque, unregulated over the counter derivatives market is going. As you know, derivatives were at the center of the JP Morgan trading blow-up, so the loss has seemingly reignited scrutiny from Washington. But here’s a caveat before you get too hopeful: guess who has reportedly been the single biggest donor to the chair of this senate committee? Ding. Ding. It’s JP Morgan.

And who is the regulator we really want to hear from? One that oversees America’s largest banks — the Office of Comptroller of the Currency. The OCC reportedly pledged to take a more aggressive approach to regulation after the agency caught heat for being lax in the run-up to the 2008 crash. Now, it’s obviously facing some questions about follow-through. William K. Black will help explain why he says that it, as well as the Federal Reserve, have been the two dogs that failed to bark in all of this.

And the US’s largest foreign creditor, China, can now bypass Wall Street and buy US government debt directly from the US Treasury, making this the Treasury’s first ever direct relationship with a foreign government. That’s all according to Reuters. We’ll give you our two cents on today’s “Loose Change” with Demetri, Lauren and Shannon.

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