In the wake of last week’s news that investment bank JP Morgan had lost a staggering $2 billion in hedge fund trading, President Obama today proposed a new “Dimon Rule” that would prohibit banks from investing in securities that lose money. The rule, named for JP Morgan CEO Jamie Dimon, would hold investment firms civilly and criminally liable if their investments decrease in value.
President Obama announced the initiative in a press conference at the White House this morning. As reported by the Wall Street Journal, President Obama praised Dimon and JP Morgan saying, “JP 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."
Obama continued, “That is why I have directed the Securities and Exchange Commission to make it illegal to lose money in the markets. Jamie Dimon is a good and honorable man and if it was illegal to lose investment money, he would not have broken the law. Americans are hurting and making losing money illegal is one thing that the government can do to make their lives easier.”
The proposed Dimon Rule is the latest in a series of Obama Administration reforms of the financial industry. In 2010, Congress passed the Dodd – Frank Wall Street Reform and Consumer Protection Act which protected against future financial crises by placing more power in the hands of the federal regulators who did nothing to prevent the 2008 financial crisis. The law also includes the Volcker Rule, which bans banks from using deposits for trading on the bank’s proprietary accounts. More recently, Obama proposed the Buffett Rule, a minimum tax for millionaires that would generate $36 billion annually as the solution to the nation’s $1.3 trillion annual federal deficit. The president’s signature legislation, Obamacare, was a remaking of the health insurance industry that made it illegal to not purchase health insurance policies.
In tandem, President Obama also attacked what he called excessive profits earned by the oil industry. “When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said in the Washington Post. “They aren’t smart. And we need to end them.”
He continued, “That is why I am proposing that we return to the policies that worked in the past. By reinstituting the Excess Profits Tax that President Roosevelt used to help end the Great Depression, we can spread the wealth of these greedy corporations to where it is needed most, to the least among us.”
The proposed Exxon Rule actually goes a step farther that the New Deal-era Excess Profits Tax. Under the new law, companies would be taxed to exact value of any profits that they report to the IRS. Explains Senate Majority Leader Harry Reid (D-Nev.) in the Huffington Post, “"Democrats won't agree to a one-sided solution that lets the super-wealthy off the hook while forcing the middle class, and those in greatest need, to bear all the hardship.” Reid said, “"Republicans refused to be reasonable. They refused to raise even a penny of new revenue, or ask millionaires to contribute their fair share to help reduce our deficit and our debt.”
Reid continued, “That is why Democrats have proposed that 100 percent of profits of wealthy corporations and their millionaire owners be shared by all Americans. These new revenues will go to help fund necessary and vital programs like Social Security, Medicare, deficit reduction, and the cowboy poetry festivals that so many Americans know and love.”
Apparent Republican presidential nominee Mitt Romney blasted the two new proposed rules at a speech before the Hahira, Ga. Rotary Club’s annual pancake breakfast. As reported by the Wall Street Journal, Romney told the gathered Peach State Rotarians, “President Obama and I have very different visions. Government is at the center of his vision. It dispenses the benefits, borrows what it cannot take, and consumes a greater and greater share of the economy…. This President is putting us on a path where our lives will be ruled by bureaucrats and boards, commissions and czars. He’s asking us to accept that Washington knows best – and can provide all.” At the conclusion of his speech, Romney noted, “Speaking of consuming, this maple syrup is really delicious. I would love to be provided with another short stack.”
Rep. Ron Paul, who recently stopped spending money on his campaign, also weighed in on the new rules. Paul told Marketwatch, “"My ultimate goal remains to repeal the 16th Amendment and end the tyranny of the IRS once and for all.” Rep. Paul concluded by urging his supporters to rally in Tampa at the Republican National Convention, where they would “have a hoe-down and then march on the Federal Reserve.”
Economists noted that the president’s new rules would prevent any transfer of wealth except through the government, turning banks into giant holding companies that were only allowed to return the exact amount that the customer deposited. Milton Bergman of the People for American Dollars pointed out that without the risk of loss or the possibility of profits, investments would cease and economic growth would stop. “How does the president plan to reduce unemployment without jobs associated with growing and profitable industries?” Bergman wondered.
White House press spokesman Jay Blarney responded, “All we are trying to do is get through the next six months until the election. After that, if we win, we’ve got another two years to worry about job creation. If we don’t, its Romney’s and the Republicans’ problem.”
In case you haven’t guessed, this is a work of satire. It is not real. Some real quotes were used. When a real quote was used, its source was cited with a hyperlink. Milton Bergman and Jay Blarney are entirely fictitious. Don’t believe everything you read.
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