How pathetic was the supposed financial reform of the Dodd-Frank bill? So bad that not only did it not prevent JPMorgan's massive trading loss, no one is sure if it was even supposed to, writes Nicole Gelinas of the New York Post. The bill is supposed to prohibit "proprietary trading," but two years after it was passed "nobody knows what proprietary trading is, exactly—or whether JPMorgan was doing it." The law has a truck-sized loophole: Banks can trade to "hedge" other risks.
But hedging, especially through derivatives, is proprietary trading, a bet on where you think the market will go. "In short, Dodd-Frank told regulators to do something that is impossible—to take the risk out of something that is a risk," Gelinas writes. That wouldn't matter if the law had done what it was supposed to do, and solve the "too big to fail" problem. But it didn't. Instead, "it just gave Washington someone new to blame for the next blowup-and-bailout, namely the hapless regulators." Click for Gelinas' full column.