J.P. Morgan

In 1996, the world learned a Japanese firm had cornered the copper market. The company, Sumitomo, was fined $125 million for squeezing copper supplies and artificially inflating prices--at that point the largest penalty ever levied by a U.S. government agency. The Commodities Futures Trading Commission called the scheme “one of the most serious worldwide manipulations” of a commodity in decades. Last Monday, the Securities and Exchange Commission posted a decision that could effectively lead to a repeat of the Sumitomo corner, with one key difference: hoarding copper will now be legal.

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Normal 0 false false false EN-US JA X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:Cambria; mso-ascii-font-family:Cambria; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Cambria; mso-hansi-theme-font:minor-latin;} Rapacious capitalists ain’t what they used to be. “Law?

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Rapacious capitalists ain't what they used to be. "Law? What do I care about the law?" the shipping and railroad tycoon Cornelius "Commodore" Vanderbilt (1794-1877)  famously bellowed (in legend, if not in fact). "Hain't I got the power?" His son William (1821-1885) demonstrated a similar indifference to public opinion when he said, "The public be damned.... I don't take any stock in this silly nonsense about working for anybody's good but our own, because we are not." The banking tycoon J.P. Morgan (1837-1913) held the same view, and didn't hesitate to articulate it.

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If you haven’t been following that other British scandal—not Murdoch, but the interest-rate scandal that made heads roll at Barclays—then you really should be. As Matt Taibbi explains, it’s a neutron-bomb of a revelation that’s caused even hardened cynics to rethink their assumptions about the banking system.

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When Jamie Dimon testifies in the Senate on Wednesday about JP Morgan’s $3 billion trading loss, the focus will almost certainly be on the speculative aspect of the trade. After all, the financial reform bill Congress passed in 2010—specifically, the provision known as the Volcker Rule—was supposed to stop banks from making risky bets with their own money, at least if they benefit from government support.

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When JP Morgan announced its $2 billion trading loss a few weeks back, a handful of smart conservatives saw an opportunity for Romney to get to Obama’s left: Call for an end to too-big-to-fail. As AEI’s James Pethokoukis put it: In one fell swoop, Romney would undercut the charge that he’s a creature of Wall Street and the financial superelite. And given how many hedge fund managers and other investment pros dislike the mega-banks, Romney probably wouldn’t even take a fundraising hit.

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Since news broke about JP Morgan’s multi-billion dollar black eye a few weeks back, we’ve pretty thoroughly rehearsed the arguments against too big to fail and too big to manage, both of which apply to JP Morgan even more obviously now than they did beforehand. This morning, a former administration official well-versed in these matters suggested another indication of JP Morgan’s excessive girth: too big to hedge.

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As soon as we learned that the trader largely responsible for JP Morgan’s $2 billion-and-counting loss had been nicknamed “the London Whale,” it was pretty much inevitable that we’d find a squid on the other side of the trade. And whaddya know. It turns out there was a squid involved! Better yet, it wasn’t just any squid, but a great vampire squid—the kind that wraps itself around the face of humanity and jams its blood funnel into... well, you know the rest.  Over to you, Wall Street Journal: A group of about a dozen banks, including Goldman Sachs Group Inc.

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The Wall Street Journal has an intriguing story today about the anxiety in the White House over $2 billion-and-counting loss that JP Morgan announced last week. At first blush, the reason for the angst isn't entirely clear. After all, the loss would seem to strengthen the case for financial reform, which, as it happens, the president signed into law two years ago, and which Mitt Romney opposes. To the extent that JP Morgan revives the debate over financial reform, it would seem to benefit Barack Obama.  But, alas, the issue is more complicated than that.

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So let me get this straight. JP Morgan loses more $2 billion, reportedly thanks to the recklessness of a trader nicknamed “the London Whale” and “Lord Voldemort,” and all Morgan CEO Jamie Dimon has to say is “it was bad strategy, executed poorly”? Well, no, that isn’t precisely correct. Dimon also says he remains only “barely” a Democrat because the Democrats want excessive regulations, including the so-called “Volcker Rule” banning some types of proprietary trading.

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