JPMorgan Losses Do Not Make the Case for Regulation | Mark A. Calabria | Cato Institute: Commentary

JPMorgan Losses Do Not Make the Case for Regulation | Mark A. Calabria | Cato Institute: Commentary: "In September 2003, when warned of problems at Freddie Mac and Fannie Mae, then-House Financial Services Chair Barney Frank stated, "I want to roll the dice a little bit more in this situation." Well, Chairman Frank did indeed "roll the dice," and now the American taxpayer is almost $200 billion poorer.

JPMorgan rolled the dice, betting that the U.S. economy would improve — essentially a bet on Obama's economic agenda. That bet went south. JPMorgan lost $2 billion, one hundredth of the losses so far on Fannie Mae and Freddie Mac.

But the losses at JPMorgan were borne not by the American taxpayer, but by JPMorgan. The losses also appear to have been offset by gains so that in the last quarter JPMorgan still turned a profit."

"The losses at JPMorgan have also resulted in the quick dismissal of the responsible employees. Show me the list of regulators who lost their jobs, despite the massive regulatory failures that occurred before and during the crisis. In fact, some of the most incompetent, such as the previous president of the New York Federal Reserve Bank, actually got promotions."

"What the recent JPMorgan losses actually prove is that a major investment bank can take billions of losses, and the financial system continues to function even without an injection of taxpayer dollars."

"What we need is not a system free of errors, but one that is robust enough to withstand them. And the truth is that the more small errors we have, the fewer big errors we will have."