The US President, Mr Barack Obama, has said the $2-billion trading loss by “one of the best managed banks” J P Morgan will be investigated and it demonstrates the need for reform at Wall Street.
Had a bank not as strong as J P Morgan made the losses through betting, the Government would have had to step in, said Mr Obama, who was in the city to give the commencement address at Barnard College and attend fundraisers event.
Despite J P Morgan being run by one of the “smartest” bankers, it still lost money, making a strong case for Wall Street reform, he added.
“J P Morgan is one of the best-managed banks there is.
Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting,” Mr Obama said in an interview with ABC’s The View . The full episode will air on Tuesday.
“We don’t know all the details. It’s going to be investigated, but this is why we passed Wall Street reform,” he said.
Mr Obama said Wall Street reform is “important” as financial giants like J P Morgan are able to weather an error that the bank’s own CEO called “egregious,” but smaller institutions would not be able to take such huge hits.
“This is the best, or one of the best-managed banks. You could have a bank that isn’t as strong, isn’t as profitable making those same bets and we might have had to step in,” Mr Obama said, adding, “That’s exactly why Wall Street reform’s so important.”