GOP AND BANK LOBBY NEED STRAIGHT JACKETS

JPMorgan Chase has been lobbying to make exactly the kind of trades that just lost the company billions of dollars. 

New York-- JPMorgan Chase announced Monday that Ina Drew, the firms chief investment officer, has left the bank after revelations of a $2 billion loss sustained over the past six weeks. These developments illustrate a huge need for Congress to implement more oversight, not less regulation on the financial sector.

A statement issued by the company said Drew made the decision to retire, a move that was widely expected after the company disclosed the unit she managed had suffered a major loss.


Soon after lawmakers finished work on the nation’s new financial regulatory law, a team of JPMorgan Chase lobbyists descended on Washington. Their goal was to obtain special breaks that would allow banks to make big bets in their portfolios, including some of the types of trading that led to the $2 billion loss now rocking the bank. Several visits over months by the bank’s well-connected chief executive, Jamie Dimon, and his top aides were aimed at persuading regulators to create a loophole in the law, known as the Volcker Rule.

The rule was designed by Congress to limit the very kind of proprietary trading that JPMorgan was seeking...The loophole is known as portfolio hedging, a strategy that essentially allows banks to view an investment portfolio as a whole and take actions to offset the risks of the entire portfolio. That contrasts with the traditional definition of hedging, which matches an individual security or trading position with an inversely related investment -- so when one goes up, the other goes down. (Reporting  by Edward Wyatt in The New York Times.)