Some might use the old cliché: ‘the pot calling the kettle black’, but that doesn’t do justice to the absurdity of this proclamation by President Obama, which is more like the sun calling the stove hot:

“JPMorgan 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,” Obama said on ABC’s “The View,” according to a transcript released by the network.

First, having the President of the United States imply that JPMorgan’s $2 billion loss has no end in sight is irresponsible at the least. Second, how would one of the ‘best-managed banks’ benefit from having one of the most fiscally irresponsible institutions in the country telling it what to do? This $2 billion dollar loss in one sector of JP Morgan’s business (they ran a profit overall) pales in comparison to the $1.4 trillion in annual deficits racked up by the U.S. federal government. And if Jamie Dimon is one of the smartest bankers we have, then who are the super-duper-geniuses that know better than him on how to structurally eliminate loss?  Jon Corzine?  If such people existed, the government could issue simple task lists and how-to guides, and anyone could run a profitable bank, or any business, so long as they followed it. This is obviously not the case. If our best and brightest, as Obama describes Jamie Dimon, make mistakes, then how are a group of regulators going to know better? And if these regulators also make mistakes, how is it beneficial to institutionalize these mistakes via the architecture of Dodd/Frank? At least in the current setup, Jamie Dimon can purge the failed people and failed policies. The real problem? We’ll get to that in a bit.  Continue reading →