JPMorgan's Risk Gauge Aggravated Trading Loss, Dimon Says

I thought Jamie Dimon handled himself very well in front of Congress.  While so much has been made about this trading loss, which really is relatively small compared to the size of the firm, the bigger issue is on the transparency of banking operations.  No bank should engage in financial dealings that aren’t understandable to someone with financial sophistication.  For management to have not caught the excessive risk taking earlier, the operations had to be done in a way in which the ambiguity of the strategy delayed the response time.  Regulators should simplify things by keeping all swaps on exchanges, and demanding more transparency on derivative contracts.  This doesn’t have to be an all out assault on banks and should be done tactfully, but creating a more transparent market place would only benefit capital markets as we have seen by the turmoil of the last 5 years.  It’s tough to work out compromises on the important issues such as this because politicians and regulators are acting in such a spiteful way against the banks, and the banks are engaged in extensive political lobbying to combat this.  Once people work together to do what is best for the economy then I would expect things to really begin to improve.