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FOX BUSINESS' Charlie Gasparino joined the Tom Sullivan Show to discuss the JP Morgan mess. Gasparino says banks like JP Morgan are too big and it's t...
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-- -- New York Post this morning there's an article.
In the New York Post saying break up the banks might Charles Gasparino.
Well -- look who's sitting right here in the students who on this in just -- in so.
We -- then the headlines as of dollars your position -- story for governor but any time that was next.
Well I mean you know I think when you look at this way we should point out that you know in of itself Glass-Steagall.
Bringing back listing of the separation of investment commercial banks -- at the big banks -- to solve this from because believe and this.
This occurred on the investment banking side issues which is what the financial crisis it was on the doesn't -- this -- on the commercial -- said this is part of a portfolio money 350 billion dollars a money known as the bank's internal portfolio.
-- -- -- There's all sorts of stuff and that a lot of it's you inherit when you take over -- you know JPMorgan took over a lot of banks including -- -- Washington Mutual and and and other users -- Bear Stearns that you inherit some of that stuff yet to hedge those positions.
Those hedges on some of those positions a lot of it's -- finally is in treasuries we should plan government securities.
But some that is and risk your stuff and you have to -- that stuff and that's where they went wrong here might point oh in the story and I I I keep -- in this trump.
And skits and get some I've written about this and -- as a -- now get some of some traction.
Which point out that even before this occurred the big banks.
-- law and it basically reaching out to get to the Romney people Mitt Romney's been the presumptive Republican nominee for president and and and -- Obama's people.
He trying to gauge the temperature on a potential bank bailout because if I think JPMorgan was smaller.
Particularly if you divided out investment banking commercial banking.
I think Jamie -- known how good he is catching most of this when it came to his attention sooner and post a loss would have been smaller I mean you know.
Three billion dollar losses out of the blue should not have been issued to -- and yeah we should point out it could grow our fan clubs that you -- he's stubborn.
They always underestimate these exit Google down one to -- you should know that truck and current round there was are scrambling is this is -- I'm just saying that.
This surprise thing like this should not happen if she and the reason why did.
Is because the police -- if you think about what -- -- what he has to worry about branches.
Deals.
Loans -- -- -- -- global banking.
You know new new.
New outpost in Singapore image it's Panama given you the full Monty I mean it's a lot of stuff.
I think that these bank should be smaller.
I don't like the notion of putting guns the people's heads to make us all remember one thing there are ready government subsidize the taxpayer covers.
You know there are deposits yeah right the other trillion dollars deposits and look at it this way.
FDIC insurance which is a jokes and you know that the government's got to I don't think there's enough money in the FDI CE it's fun to like cover you know.
You know -- Green point national bank much -- -- trillion dollars in JPMorgan.
FDIC insurance covers accounts up to 250000.
Dollars for most people don't it doesn't it doesn't have any limits on the total -- Most people don't have to -- -- 50000 dollars and an account.
Right -- banker -- so guess what you have to make up a lot of individual accounts it could be that full trillion if JPMorgan ever made a mistake that was.
Life threatening -- So it was the news from you today is that this was on the commercial side -- little I think that is really important to know.
Clearly but it doesn't change through the -- the issue in my view it did did did it only means.
That you know Glass-Steagall in of itself.
Would have prevented other than this.
If Jamie Dimon has -- to worry about he catches this thing.
So we do the running an investment bank.
Or commercial bank of what is it why are banking you would have why should why should be doing both I don't know Bubba dead that they have so here we are they have Citigroup has that America has so.
When I was in the investment business I was on the retail side.
And we had people that were in some deep dark -- some place.
Somewhere that would they monitored with help of computers every one of our trade try if it got out of some range that they had.
They would.
Want to know before the trade number and immediately what was what why did you do this trade what's about this straight I'm sure why don't why we have alarm bills that went off.
Well I think in these big banks I -- some alarm bells went off who knows how they were communicated.
-- when you when you're investing in these sort of esoteric derivatives it's hard to like sort of put -- -- -- it crude palm would there is it a case to be made I'm sure Elizabeth -- today was trying to make it that they shouldn't do any of this stuff.
We should point out that banks are in the business of taking risky any time they make a loan to somebody who do.
-- and of banquet and with no risk capital in this country that's Steve Jobs would never have started apple that's why some small businesses can't get loans because their ray action down the risk it's easier to make -- -- to caterpillar.
And two GE which all else creates jobs overseas than it is to some that it wants it create an ice cream factory and you know Omaha yeah I'm just -- it.
That's the way you look at it you don't want banks not to take risk.
And -- there always gonna lose money between Allen and what you have to do is create a system.
Where if they lose it it's not gonna blow up the entire.
US economy -- the world and in this did not but how cool and but it was scary about this Tom is that it -- The reason why people are scared about this -- cause it came out of the blue.
It's not supposed to do that it JPMorgan theoretically all right so Dodd-Frank.
Is is being implemented.
Would Dodd-Frank of confidence a white and it -- I mean I mean people think Dodd-Frank has an influence and oh yeah a lot of -- There -- regulators in JPMorgan's office every day.
Looking at stuff why did they catch this.
Let's point out that even with the vocal rule which presents for its proprietary trading it would cover this -- businesses and proprietary trading.
This is hedging activity in another part of the bank proprietary trading -- in the investment bank.
This is -- -- complex it is that's well he's also the regular.
Thing is is that -- so so you work with money and -- and you go to work every day you do it for 25 years and you decide to make a trade and you like you said.
Nobody bats a thousand in the money -- and finally going to make.
Mistakes JPMorgan is swimming with regulators.
What makes you think more regulation would catch any of this I mean there's so many people look at that stuff.
Forget about whether they could do it or not why weren't direct point to regulate against -- you know -- and because of Jamie -- can't catch it.
Nobody at the Fed will nobody at the SEC will -- the their the I'm just on the answer is -- more regulation the answer is effective regulation and smaller banks is.
And Charlie's not exaggerating folks over at JPMorgan's headquarters they have.
Permanent offices with in their building that are the offices of the regulator wrestle with in the bank.
Yet and Dodd-Frank is even in May those offices a lot bigger listen and you know me I'm not a and Occupy Wall Street you know big government liberals are from I just do worry that if we have banks that could take down the economy.
Jamie diamond I I really respect the needs of really good guy and I and he's -- -- -- frank if you notice he took full response.
What is the PR firms are giving him the best advice I I think he instinctively knew you know we have -- this is no advice he did that all I was I was wrong we made a mistake we screwed and this is a type of guy is -- no -- no one asked coach and to do this.
He he's handling that right but I did have a -- conversation.
And reporters on the -- this is that were good the data whole thing went down.
Last Thursday.
About too big to fail and he really believes that we need big banks.
We don't have big banks you know caterpillar in these big companies won't get services to Obey -- -- -- that he thinks there should be bigger banks well I think those big banks.
-- course is too much when they screw up.
And beat they don't service to type -- jobs we need to be creative remember.
Big companies are creating the jobs right now if you look at what is the engine of growth coming -- of these recessions.
Before the obamas before -- before Obama comics it was generally small businesses as you know a small businesses are scared to death of the president because.
The word about higher taxes and regulations and things -- Frankie is killing small bank well and but there are no small banks left or very few.
David gobbled up by these tax.
Shoot -- drew be fired.
You know I don't know I actually she got a sterling record and I know I mean she's detect -- they -- at -- of the chief investment officer.
Who which is responsible for this.
You know I could just tell you when something happens under your watch and you've been briefed on and a lot.
Remember one of the everybody -- the bullet was -- in the sky the -- London -- -- -- actually put on the position now he's saying that management told me to do these trees outside he -- management told me that they told them.
Every that would into the back what they gonna JPMorgan tell me -- -- People there when this first -- -- -- you know don't blame him totally.
-- the stuff was vetted.
You know was he -- -- -- he was lying about something the guy was not just following orders he was saying this is what I was does what I'm doing to -- this what do you think.
And they were probably -- and -- that I know they were saying so looks good to make go for a and -- she deserves to be fired over that.
I think we need to more no more I remember sometimes these companies do things.
You know cause they have to someone at the top -- to take the fall.
Com and she ran brisk on that on that occurred and the risk either wasn't.
Adequately communicated to diamond Jamie -- came out -- called the summit -- of this group you know tempest in the teapot.
Or eight you know keeping pay attention to it because it didn't land on his desk forceful -- -- but something and screwed up where a guy who cares about this stuff.
Didn't know enough about it.
Current.
Charlie Gasparino the article break of the banks in today's New York Post and you can -- -- -- -- On a regular basis on the Fox Business Network think -- into.
