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There is great wisdom in comedy, including the universally applicable lessons in ethics. In the award-winning television comedy "Taxi," Alex Reiger, the wise cabbie of the Sunshine Cab Company, attempts to belatedly explain to the parents of a young woman who married a young cabbie just hours after meeting him: "Mr. Carothers, three days ago, John met your daughter in a bar. They fell in love. And after looking at each other countless times, they drove to Maryland and got married." The response of Mr. Carothers, as he turns to his daughter is, "You were in a bar?"
When JPMorgan Chase announced that it had lost $2 billion (give or take a billion) on a hedge/bet out of the London trading office, the Wall Street reaction was, "Oh no, we're going to have the Volcker Rule for sure now." Their assessment of their regulatory future has already been proven prescient. The U.S. Senate's chief proponent of the law, Carl D. Levin, said two days after the losses were announced that "large banks will 'lose their battle' to defang new regulations."1 The statement from the White House was simple-the mishap showed why "it is so important to fully implement Wall Street reform."2
Like Mr. Carothers' response to his daughter's hasty elopement, the banking world's response takes the focus off the issue and onto a lesser included evil. The Volcker Rule is the least of the implications of the bad decisions made by the so-called "Voldemort" or "Whale," the AKA's for Chase's London trading desk. Losing so much money without a hint to investors as to how much was at risk is the problem, not the Volcker rule. Jamie Dimon, Chase's CEO, president, and chairman, has acknowledged that the $2B+ loss was a"terrible, egregious mistake."3 Therein lies the issue. The losses came from a confluence of management missteps and oversights, the kinds of missteps and oversights that give even the retail Christmas savings account holders at the local Chase branch pause. Customers at all levels of Chase's empire deserve better than the revealed mistakes and dysfunctions that led to the losses. The Volcker Rule will not fix those issues. The problem is not that Chase is too big, that the regulations are insufficient, or even that...