How risky is too risky?June 13, 2012 @ 9:45 am (Updated: 9:49 am - 6/13/12 )
Senators want to know how a banker like Jaime Dimon could take the kind of risk that last month saw JP Morgan lose at least $2 billion on what he himself calls a "stupid trade." (AP Photo/file)
Senators want to know how a banker like Jaime Dimon could take the kind of risk that last month saw JP Morgan lose at least $2 billion on what he himself calls a "stupid trade."
But as CBS's Nancy Cordes pointed out:
"Even a loss of $5 billion, if that's what it ends up being, is small compared to how much the company made in profits last year," said Cordes.
Yes! You can make a tremendous amount of money taking risks like this!
Now people who have worked with him say Jaime Dimon is one of the good guys on Wall Street. And he told the Senate he's supported clawback policies so that traders who screw up pay a personal penalty.
"For senior people, which most of these people are, we could even clawback things like cash bonuses. After the crisis, a lot of people walked away from companies that went bankrupt with a lot of money, some of that was inappropriate," said Dimon.
When asked if this type of policy had been used at his bank, Dimon responded: "These new policies have not been used thus far."
And I'm guessing the REASON they haven't been used is that if you start punishing risk takers when they lose money, they might stop taking the kind of risks that MAKE even MORE money.
And government can't stop this. You outlaw ONE kind of risky deal, the banks will just come up with a slightly different one. Just like when you outlaw one designer drug, a new one takes its place, and the party goes on.
Risk is how bankers get their high.
All we ask -- and I speak for those of us who are hoping not to see our retirements threatened a SECOND time -- is that if you guys are going to manufacture these financial hallucinogens, you not spike the water supply with them.
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