Banking Dysfunction

“Has anyone bothered to study the cumulative effect of all these things?” the chief executive officer of JPMorgan Chase reasonably inquired of the chairman of the Federal Reserve Board at a bankers gathering in Atlanta last June. The CEO, Jamie Dimon, was referring to the combination of cyclical hangover and regulatory constriction. The chairman, Ben Bernanke, replied, “It's just too complicated. We don't really have the quantitative tools to do that” (Grant and Masters 2011: 1).Banking dysfunction is the subject at hand. For what ails us, I am about to blame modern regulation, the asphyxiating philosophy of modern regulation, the bankers themselves, the pure paper dollar, manipulated interest rates, and the human condition. Concerning bank capital, I favor just enough but not too much, the exact amount best known to people who have not been elected to Congress. It isn't the lack of capital that's put the American banking system behind the eight ball; it's a shortage of capitalism