Shortly after Jamie Dimon's appearance on Fox last month, PBS's Bill Moyers had former Chairman of the Board of Governors of the Federal Reserve System and head of President Obama’s Economic Recovery Advisory Board, Paul Volcker, whose namesake is the Volcker rule that Wall Street has been lobbying so hard to water down or get rid of, as his guest.
In light of the recent debacle at JPMorgan Chase where Dimon's company lost at least $2 billion on high risk derivatives trading, his advice for Dimon during this interview is downright prescient; If you want to participate in proprietary trading, give up your banking license.
You’d think after such a calamitous economic fall, there’d be a strong consensus on reinforcing the protections that keep us out of harm’s way. But in some powerful corners, the opposite is happening. Business and political forces, including hordes of lobbyists, are working hard to diminish or destroy these protections. One of the biggest bull’s-eyes is on the Volcker Rule, a section of the Dodd-Frank Act that aims to keep the banks in which you deposit your money from gambling it on their own — sometimes risky — investments. [...]
Volcker contends the rule aims to curb conflicts of interest between bankers and their customers. He suggests that former investment companies like Goldman Sachs and Morgan Stanley, which sought banking licenses during the economic crisis in order to access federal protection against failing, should now turn in those licenses if they want to do speculative trading.
“You shouldn’t run a financial system on the expectation of government support. We’re supposed to be a free enterprise system,” Volcker tells Moyers. “The problem of course is once they get rescued, does that lead to the conclusion they’ll get rescued in the future?”
Transcript of the clip below the fold and you can watch the entire interview at the link above.