JPMorgan Loss Shows Wall Street Needs Limits, Trumka Says
JPMorgan Chase & Co.’s $2 billion trading loss shows that, left unchecked, Wall Street will lead the U.S. economy “off a cliff, just like they tried to the last time,” AFL-CIO President Richard Trumka said.
“It says that financial regulation is more needed now than it ever was,” Trumka said in an interview on Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend. “The lack of Wall Street regulation is what got us to the mess that we came to, and almost totally disrupted our economy.”
JPMorgan Chief Executive Officer Jamie Dimon told analysts May 10 that the firm suffered a $2 billion trading loss after an “egregious” failure in a unit managing risk. The loss jeopardizes Wall Street banks’ efforts to loosen a federal ban on bets they make with their own money.
“We must have Wall Street in check to restore the balance between the financial economy and the real economy,” said Trumka, 62. The AFL-CIO is the nation’s largest labor federation.
JPMorgan shares fell 9.3 percent to $36.96 at the close of trading yesterday in New York.
Support for Obama
JPMorgan’s trading loss shows “the importance of oversight and transparency in the derivatives market,” Andrea Saul, a spokeswoman for Republican presidential candidate Mitt Romney, said in an e-mailed statement yesterday. Romney, co-founder of private-equity firm Bain Capital LLC, didn’t respond to a question from a reporter about the loss at a campaign rally in Charlotte, North Carolina.
The AFL-CIO unanimously endorsed President Barack Obama’s re-election in March, citing Obama’s efforts to overhaul Wall Street trading rules and rewrite U.S. health-care laws.
Romney’s claim that he shares credit for the auto industry’s recovery is “almost laughable,” Trumka said.
The former Massachusetts governor, whose father was governor of Michigan and headed American Motors Corp., said in a May 7 ABC television interview in Cleveland that he deserves credit for the auto industry’s comeback.
“Didn’t he oppose that? Didn’t he say that they should have let them go bankrupt?” Trumka said. “This shows his lack of understanding of the economy. If we would have let the auto industry go bankrupt, one out of four manufacturing jobs in this country would have been gone, and we don’t have enough manufacturing jobs as it is. We need to increase” those jobs.
Unions want the economy to add 4 million manufacturing jobs over the next “couple of years,” Trumka said.
He predicted that Wisconsin Governor Scott Walker, a Republican, will be defeated in a June 5 recall election. Walker is “permanently unpopular because, instead of taking on job creation, he actually took on workers,” Trumka said.
Organized labor will provide “some help” in financing the Democratic National Convention in Charlotte, Trumka said, adding, “it won’t be as much as it was in the past.”
Unions contributed $8.6 million to the host committee for the 2008 Democratic convention in Denver, according to the Center for Responsive Politics, a Washington-based research group.
Unions said last year that they will boycott the convention because Democrats chose to hold it in North Carolina, a state that lacks unionized hotels for candidates and delegates and has a low rate of unionized workers.
Yesterday, Trumka said unions will invite Obama and other administration officials to address an alternate labor summit on Aug. 11 in Philadelphia before the nominating convention, which begins Sept. 3. He said North Carolina was “not a very good venue.”
North Carolina ‘in Play’
“North Carolina, they believe, is in play, and as a result of that, they wanted to have a big showing there so that they could energize and mobilize people in the state,” Trumka said, “I hope that works.”
Trumka said union members still are enthusiastic about Obama, especially compared with Romney, who he has said doesn’t look out for workers’ interest and is beholden to wealthy donors.
“This is really a decision about whether we’re going to have stockbrokers and the financial world continue to run the country, or whether we’re going to have an economy that’s a little more balanced and puts people back to work, rewards hard work and does things for that,” he said yesterday.
Although labor unions have had disputes with Obama on issues like free-trade agreements, “by and large, when it comes to fighting for working people, the 99 percent, Obama’s on our side and Mitt Romney is on the other side,” Trumka said.
Labor unions spent $450 million in 2008 helping elect Obama and Democrats to Congress. They haven’t said how much they plan to spend this year.
The AFL-CIO may deploy as many as 400,000 volunteers this year in its effort to re-elect Obama, Trumka said May 1. The volunteers, accounting for about 3 percent of the 12 million members in AFL-CIO affiliates, will talk to friends, neighbors and co-workers in a get-out-the-vote effort, he said.
Republican policies are “insane,” Trumka said.
“It’s what brought us to the brink of disaster under George Bush, and now it’ll take us back into recession, all the talk about austerity, all the talk about not investing in our future, not investing in roads, bridges, schools and all that stuff is -- is literally insane for a country,” he said.
While Trumka said he supported Obama’s May 9 endorsement of same-sex marriage, it “could turn off some labor people” and business people.
“We think that everybody ought to be treated equally, so it’s marriage equality is what we’re looking at, and people shouldn’t be discriminated against,” he said.
To contact the reporter on this story: Kathleen Hunter in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jodi Schneider at jschneider50bloomberg.net