June 15 (Bloomberg) -- The Obama administration should pursue diplomacy concerning the violence against Sunni Muslim civilians in Syria because the potential costs of military intervention are too great, said U.S. Senator Jack Reed.
“I think that at this stage we still have to -– as frustrating and as painful, given some of the scenes we’ve seen -- we have to pursue diplomacy,” Reed, a Rhode Island Democrat, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” airing this weekend.
Secretary of State Hillary Clinton this week accused Russia of providing Syrian dictator Bashar al-Assad with attack helicopters to use in the conflict. Senator John McCain of Arizona, the top Republican on the Senate Armed Services Committee, is calling for the U.S. to arm Syrian rebels and provide them a safe haven in the country. He told the newspaper The Hill this week that it’s “disgraceful” that the White House is doing “nothing” to assist civilians under attack.
Reed, also a member of the Senate Armed Services Committee, said he holds out hope the Russians will decide to use long-standing ties to Assad to help become a force in ending the violence.
“One of the key elements here is the Russians,” said Reed, 62. “They have long-time ties to the Syrian government, to the Assad family, not just the government. I know we’re working very hard to get them to recognize that this regime no longer is legitimate in the eyes of the world.”
Romney on Defense
Reed also criticized a proposal by presumptive Republican presidential nominee Mitt Romney to boost the Pentagon’s budget by $96 billion next year and by $2 trillion over a decade.
He rejected Romney’s contention that President Barack Obama is hollowing out the U.S. military with too many cuts. He defended a decision by then-Defense Secretary Robert Gates to cut almost $500 billion over 10 years to draw down defense funds after the end of the war in Iraq and the slimming of forces in Afghanistan.
“First of all, I’d say ask him how he’s going to pay for it,” Reed said. “There’s a growing realization that our strength as a nation rests upon our economy as well as our military prowess.”
A former Army Ranger and paratrooper, Reed is best known for his grasp of military issues. Though he voted against the invasion of Iraq in 2003, he has visited the nation repeatedly since the war began. He also has frequently visited Afghanistan.
Reed, who also serves on the Senate Banking Committee, said the Senate should consider further action after this week’s testimony before the panel by JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon on the bank’s trading losses of more than $2 billion. He said senators first need to let regulators probe the circumstances and then proceed.
“We should wait, but not indefinitely, but wait until we get a good readout from the Office of the Comptroller of the Currency, from the Federal Reserve, from those who are charged with not only supervising, but analyzing what happened,” Reed said.
Dimon told the panel that overconfidence in trusted managers let traders accumulate the losses through a strategy that “violated common sense.”
Risk-monitoring systems and executives at the largest U.S. bank failed to adequately police threats concentrated in a derivatives portfolio at a London unit of the chief investment office, he said. The division wasn’t subjected to the same scrutiny as other businesses, and managers there deviated from control procedures, even after triggers on risk limits were breached, Dimon testified.
Reed said it’s clear that the trading loss at the New York-based investment house was a setback to calls by Republicans to repeal the 2010 Dodd-Frank law boosting regulation on banks.
He pointed to Dimon’s testimony that some aspects of that law have worked, even as others haven’t.
“That was something that they didn’t quite expect -- that he would be clear that there were parts of the bill that are very necessary,” Reed said.
Noting that Dimon had indicated that there is room for a Volcker rule -- a provision in Dodd-Frank that would limit proprietary trading by banks -- Reed said, “If a good Volcker rule was in place, my argument would be that they wouldn’t have suffered $2 billion or more, maybe more, of direct losses and a significant loss in their shareholder equity.”
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