When Washington is on the brink, who has the clout to persuade legislators to keep government open? The obvious answer is the US president. A better one is Jamie Dimon, chief executive of JPMorgan Chase. With last week’s vote in doubt, Mr Dimon helped to arm-twist Congress to pass a bill to keep the Federal government running for most of next year. What a splendid public service, I hear you say. In fact, his motive was more specific. The bill included an unrelated item allowing banks to resume derivatives trading from their taxpayer-insured arms. That ban is now history. Who other than a Wall Street titan could demand — and receive — such a service?
More than six years have passed since the collapse of Lehman Brothers triggered a global meltdown. Never again would Wall Street be allowed to write the rule book for itself, said Washington. To some degree, its wings were clipped. Big banks lobbied fiercely against parts of the 2010 Dodd-Frank reform act. In many cases they failed. Thus, Washington now has a consumer financial protection agency. The Federal Reserve has imposed a ceiling on Wall Street’s leverage ratios. Banks must put many types of derivatives through a central clearing house. Under the Volcker rule they must keep proprietary trading separate from their deposit taking mother ship.