Today’s sudden revelation that J.P. Morgan lost $2 billion†had a lot of mouths hanging open, and while the detail’s of the company’s wagers gone wrong aren’t all present, Attorney General Eric Schneiderman argued on MSNBC that the case demonstrates the need of strengthening financial regulations.
“People talk about principles,” Mr. Schneiderman said. “There’s one principle: Unregulated markets always crash. Unregulated markets always produce massive losses on risky bets.”
Almost since the day Barack Obama was sworn in, Wall Street has been warning about the catastrophic consequences of his presidency on its industry and, by implication, on the economy and society beyond. Last year, their house organ, the editorial page of The Wall Street Journal, called the president “a determined man of the left whose goal is to redistribute much larger levels of income across society.” Steven Schwartzman of the Blackstone Group compared his efforts to raise taxes on private equity firms to Hitler’s invasion of Poland in 1939. And if the president wins re-election this fall, “we might as well leave the country,” one billionaire hedge funder proclaimed on CNBC earlier this year.
But Wall Street likes nothing if not winners, and now that Mr. Obama seems more of a favorite in November and the sharpest GOP strategists caution that taking over the Senate remains a longshot, attention among the titans of finance has turned to their last bulwark against runaway regulation: the House of Representatives.
The crux of the concern is the House Committee on Financial Services, through which some of the most critical regulatory legislation, including Sarbanes-Oxley and Dodd-Frank, has passed over the past decade. Because even if Republicans retake the White House, or snatch the Senate away from Democratic hands, it may not matter much for Wall Street if the House flips from Republican to Democrat and the House Banking Committee ends up in the hands of Maxine Waters, the 17-term Democrat from South-Central Los Angeles.
Wall Streeters say that the prospect of Ms. Waters at the helm of the Financial Services Committee could actually make them regret chasing Barney Frank—who was slated to retake the committee before he abruptly announced his retirement this year—out of Congress.
Citigroup CEO Vikram Pandit appeared alongside Mayor Michael Bloomberg today at a press conference announcing New York’s top rank in a Citi-commissioned Economic Intelligence Unit research report on the world’s most competitive cities. Mr. Pandit said Citigroup’s current “mission is to help the cities on this list and others compete on the global stage,” so The Politicker asked his thoughts on the Occupy Wall Street protesters and others who blame the financial industry for subverting the democratic process and spreading economic inequality.
“I think the starting point is we have about 24,000 people that are our colleagues in New York City that makes us, I think, the second largest employer in the city. We’ve been here 200 years through ups and downs in the markets and, as the mayor pointed out, the last two, three years have been challenging,” Mr. Pandit said. “It’s very understandable that when we have so many people who want to do more than they’re able to do, want to have the kind of jobs they aspire to, that does create a sense of frustration. And a lot of that anger has been directed at big banks and Wall Street, and that’s understandable too.” Continue reading “Citigroup CEO Vikram Pandit Says Anger With Wall Street Is ‘Understandable’”→
Bonuses paid to New York City financial employees are expected to decline by 14 percent to $19.7 billion during this year’s bonus season, according to an estimate released today by State Comptroller Tom DiNapoli.
“Cash bonuses were down in 2011, reflecting a difficult year on Wall Street,” DiNapoli said. “Profits were down sharply and securities firms in New York City resumed downsizing in the second half of the year. The securities industry, which is a critical component of the economies of New York City and New York State, faces continued challenges as it works through the fallout from the financial crisis and adjusts to regulatory reforms.” Continue reading “DiNapoli Forecasts Sharp Decline In Wall Street Bonuses”→