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Wall Street banks angling for Dodd-Frank loophole
Key Excerpts from Article on Website of San Francisco Chronicle (San Francisco's leading newspaper)


San Francisco Chronicle (San Francisco's leading newspaper), June 30, 2012
Posted: July 10th, 2012
http://www.sfgate.com/opinion/reich/article/Wall-Street-bank...

Wall Street has already watered down or delayed most of Dodd-Frank [financial reform act]. Now it wants to create a giant loophole, exempting its foreign branches from the law. Yet the overseas branches of Wall Street banks are where the banks have done some of their wilder betting. Four years ago, bad bets by American International Group's London office nearly unraveled the U.S. financial system. When the Commodity Futures Trading Commission, the main regulator of derivatives (bets on bets), recently proposed extending Dodd-Frank to the foreign branches of Wall Street banks, the banks screamed. "If JPMorgan overseas operates under different rules than our foreign competitors," warned Jamie Dimon, chairman and CEO of JPMorgan, Wall Street will lose financial business to the banks of nations with fewer regulations, allowing "Deutsche Bank to make the better deal." This is the same Jamie Dimon who chose London as the place to make highly risky derivatives trades that have lost the firm upward of $2 billion so far - and could leave American taxpayers holding the bag if JPMorgan's exposure to tottering European banks gets much worse. JPMorgan's risky betting in London is added proof that unless the overseas operations of Wall Street banks are covered by U.S. regulations, giant banks will hide irresponsible bets overseas. Squadrons of Wall Street lawyers and lobbyists have been pressing all the agencies charged with implementing Dodd-Frank to go easy on the Street.

Note: The author of this article, Robert Reich, is former U.S. secretary of labor, professor of public policy at UC Berkeley and the author of Aftershock: The Next Economy and America's Future. He blogs at www.robertreich.org.


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