WASHINGTON (Reuters) - U.S. banking reforms could not have prevented JPMorgan Chase & Co’s trading losses, and those involved in the activities that went awry should be held accountable, U.S. House of Representatives Speaker John Boehner said in an interview aired on Sunday.
“I don’t believe there’s anything in Dodd-Frank (financial reform law) that would’ve prevented this activity at JPMorgan,” said Boehner, the top Republican U.S. officeholder. He made the comments Friday in an interview for ABC’s “This Week.”
Last week JPMorgan disclosed that it has suffered at least $2 billion in losses due to trades that went bad. The losses from derivatives trading could widen and have placed pressure on the bank to explain what happened as lawmakers and regulators tussle over rules for Dodd-Frank enacted two years ago.
“There’s no law against stupidity. No law against stupid trades,” said Boehner.
“And as long as depositors’ money wasn’t at risk and as long as there’s no risk of a taxpayer bailout, they should be held accountable by the market and their shareholders,” he said.
The 2010 Dodd-Frank financial oversight law was enacted in response to the financial crisis includes the Volcker rule, which bans banks from making speculative bets with company money. But it includes an exemption for trades done to hedge risk.
Since the Wall Street giant announced the $2 billion dollar snafu, Democrats have shown more unity and have said it underscores the need for tougher bank regulation. Congressional Republican lawmakers, many who voted against Dodd-Frank and have sought to repeal the law, have been more splintered in their response to JPMorgan’s losses.
“There are big problems for this law, and it needs— it needs some big changes,” Boehner said, when asked if he maintains his position that Dodd-Frank should be repealed.
The Obama administration has avoided criticizing the bank, instead cautioning the losses highlight the need to protect taxpayers with tough financial regulation.
JPMorgan’s losses have given regulators a renewed argument for tightening controls on big banks and has placed a focus on whether financial firms should be required to hold more capital to cushion possible losses.
Jamie Dimon, JPMorgan’s chief executive officer, has been a critic of increased regulation. He has made a name for himself among Wall Street executives as JPMorgan has become the largest and most profitable U.S. bank.
Reporting By Margaret Chadbourn; Editing by Jackie Frank