Cameron Smith: Government-supervised financial sector may lose value

  JPMorgan Chase recently disclosed a $2 billion trading loss associated with its principal risk management unit. For a bank with a capital base of almost $200 billion, a loss of $2 billion is more of a grand annoyance than a “systemic risk,” but the political rhetoric has been explosive.   Despite the reality that taxpayer-backed deposits were not actually at risk, droves of politicians from the left are clamoring that JPMorgan’s loss is ample evidence that more government regulation is necessary while the political right is wavering on its commitment to repeal Dodd-Frank.

  But is federal control truly a better alternative? Greed, incompetence, and all sorts of other negative monikers could be applied to the American financial services industry at times. The same President, politicians, and bureaucrats who have shepherded almost $16 trillion in federal debt are gearing up the immense regulatory authority under Dodd-Frank to put the screws to banks concerning fiscally responsible behavior.