Share on Google Plus Share on Twitter 1 Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend (1 Shares)  
Printer Friendly Page Save As Favorite View Favorites (# of views)   1 comment

OpEdNews Op Eds

Why Obama Should Be Attacking Casino Capitalism -- Both Romney's Bain and JPMorgan

By       Message Robert B. Reich     Permalink
      (Page 1 of 1 pages)
Related Topic(s): ; ; , Add Tags Add to My Group(s)

Well Said 2   Valuable 2   Must Read 1  
View Ratings | Rate It Headlined to H3 5/22/12

Author 47089
Become a Fan
  (116 fans)
- Advertisement -

I wish President Obama would draw the obvious connection between Bain Capital and JPMorgan Chase.

That way his so-called "attack" on private equity is neither a personal attack on Mitt Romney nor a generalized attack on American business.

It's an attack on a particular kind of capitalism that Romney and JPMorgan both practice: Using other peoples' money to make big bets which, if they go wrong, can wreak havoc on the economy.

It's the substitution of casino capitalism for real capitalism, the dominance of the betting parlor over the real business of America, financial innovation rather than product innovation.

It's been terrible for the American economy and for our democracy.

It's also why Obama has to come out swinging about JPMorgan. The JPMorgan Chase debacle would have been prevented if the Volcker Rule were sufficiently strict, prohibiting banks from using commercial deposits to make bets except very specific offsetting bets (hedges) on narrow classes of trades.

But Jamie Dimon and JPMorgan have been lobbying like mad to loosen the Volcker Rule and widen that exception to include the very kind of reckless bets JPMorgan made. And they're still at it, as evidenced by Dimon's current claim that the rule that eventually emerges would allow those bets.

- Advertisement -

As a practical matter, the Volcker Rule is hopeless. It was intended to be Glass-Steagall lite -- a more nuanced version of the original Depression-era law that separated commercial from investment banking. But JPMorgan has proven that any nuance -- any exception -- will be stretched beyond recognition by the big banks.

So much money can be made when these bets turn out well that the big banks will stop at nothing to keep the spigot open.

There's no alternative but to resurrect Glass-Steagall as a whole. Even then, the biggest banks are still too big to fail or to regulate. We also need to heed the recent advice of the Dallas branch of the Federal Reserve, and break them up.

At the same time, there's no point to the "carried interest" loophole that allows private-equity managers like Mitt Romney to treat their incomes as capital gains, taxed at only 15 percent, when they've risked no money of their own.

If private equity were good for America it wouldn't need this or the other tax preference it depends on, elevating debt over equity. But the private equity industry has huge political clout, which is why these tax preferences remain.

- Advertisement -

Get it? Bain Capital and JPMorgan are parts of the same problem. The President should be leading the charge against both.


- Advertisement -

Well Said 2   Valuable 2   Must Read 1  
View Ratings | Rate It

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon

Go To Commenting

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Republican's Big Lies About Jobs (And Why Obama Must Repudiate Them)

Paul Ryan Still Doesn't Get It

What Mitt Romney Really Represents

What to Do About Disloyal Corporations

The Gas Wars

The Minimum Wage, Guns, Healthcare, and the Meaning of a Decent Society