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Jamie Dimon's Sudden Shift on Regulation: Opinion

Tickers in this article: JPM
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Bullion Bulls Canada ) -- As we watch the absurd melodrama surrounding JPMorgan Chase's (JPM) multibillion-dollar "trading loss" unfold before us, there are many things we still don't know.

We can be sure, however, that the truth is totally different than what is being presented by JP Morgan and the talking heads of the mainstream media.

JPMorgan Chase CEO Jamie Dimon

To understand that this is pure financial farce requires putting numbers into perspective.

Let's start with this one: JP Morgan's derivatives portfolio alone amounts to some $78 trillion in highly leveraged, ultrarisky bets, as noted by Zero Hedge .

That is the amount JP Morgan admits to. Thus, whether we are talking about a $2 billion trading loss or the $4-5 billion figure now being rumored, it's irrelevant. These are trivial numbers in comparison to bank's overall derivatives exposure.

If the media Chicken Littles really wanted to stoke some fear, they would be talking about the imminent risk of JP Morgan (and its Wall Street cronies) being forced to make good on trillions of dollars of highly leveraged credit default swap contracts should one of Europe's other debtor nations "go Greek" and default.

So we can now conclude this is a totally staged event. If there were any doubts about this, Jamie Dimon himself has put an end to them with his poor job of acting.

For nearly four years Wall Street has fought even the tiniest bit of reregulation of their sector, simply restoring a small portion of the banking regulation regime which used to be in place.

This fanatical obstructionism -- led by Jamie Dimon and JP Morgan -- has occurred despite the massive bailout package heaped upon the (surviving) Wall Street oligarchs after they had completely wiped out their own sector (and themselves) with hundreds of billions of bad bets which had all detonated simultaneously in 2008.

Thus, what we are to believe is that even though JP Morgan saw no need at all for any regulation following the Crash of 2008, this $2 billion trading loss has caused JP Morgan to do a 180-degree turn on the subject of regulation.

Jamie Dimon has suddenly seen the light: The bankers need some regulation.

Knowing that this event has absolutely nothing to do with how it's being depicted in the mainstream media (and by JP Morgan itself), we must now speculate on what is really going on here. I've formulated several viable theories:

  1. This is nothing but a sleazy political ploy by JP Morgan to skewer the Republican Party, and ensure the re-election of Barack Obama.
  2. Knowing that some reregulation is inevitable, Wall Street's new strategy is to support that reregulation, but as a "club" to be used to kill off its remaining smaller competitors.
  3. The trading loss is much, much larger than what JP Morgan admits.