The Obama administration will likely tighten rules to prevent federally insured banks from speculating with their money after financial giant JPMorgan lost billions of dollars — and continues to bleed money — on a risky bet intended to pad the firm’s profits.
“We will want to use this real-life example as something that will help instruct, help inform, how the ultimate contours of the Volcker ruler come out–make sure that it is strong,” a senior administration official told reporters on Monday, according to Dow Jones Newswire.
However, it’s unclear what specific changes regulators will make to the draft of the Volcker Rule, or if the final version will prevent trades like the ones JPMorgan made when it takes effect.
“This will help us make sure that we get a line that is tough and that makes sure that the hedging activity…mitigatges risk,” the official said. “Everyone is trying to understand what happened exactly with respect to the risk-management failure at J.P. Morgan Chase,” the official said.
