People walk past the JPMorgan Chase Building on Park Avenue in New York. The company's estimated loss is now estimated at closer to $3 billion.
People walk past the JPMorgan Chase Building on Park Avenue in New York. The company's estimated loss is now estimated at closer to $3 billion. - 
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In 1933, at the height of the Great Depression, Congress passed a law that came to be known as the Glass-Steagall Act. Its purpose was to protect the savings of millions of depositors from being gambled away by investment bankers in the casino called Wall Street -- as occurred when the economy collapsed in the crash of 1929.

Glass-Steagall was repealed 70 years later when the Clinton administration agreed with Wall Street and congressional Republicans that the financial system was sophisticated enough by then to avoid excessive risk-taking.

Then came the near-meltdown of 2008. But instead of a new Glass-Steagall, we got Glass-Steagall lite, in the form of the Volcker Rule named for former Fed chair Paul Volcker. Still a work in progress, the Volcker Rule in its current iteration bars banks from gambling with customers' money except when necessary as a counter bet, or a hedge, to other investments they've made.

But JPMorgan Chase, America's largest bank by assets, has set out to make that exception so large as to consume the whole rule. And it created a division to make exactly the kind of big, risky bets Glass-Steagall was supposed to prevent.

Now, with JPMorgan's announcement that it lost at least $2 billion, we're right back to where we were before the 2008 crisis with the same kind of -- to quote CEO Jamie Dimon -- risky, poorly-monitored, and poorly-executed trades that caused the crisis in the first place.

Dimon's promise that JPMorgan will "fix it and move on" is not reassuring. Because we now know something we should have known all along -- that any big bank on Wall Street can still make big, risky bets with commercial deposits. And will do so unless barred from doing it because there's so much money to be made when the big bets go right.

Let's stop hoping Wall Street will mend itself. And stop pretending the Volcker Rule, with its giant loophole, will be adequate to separate the casino of investment banking from commercial banking's necessary role of taking in saving and lending them out.

We need Glass-Steagall back.

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