U.S. Senator David Vitter today made the following statement regarding the U.S. Senate Banking committee hearing with Wall Street regulators following the trade at JPMorgan Chase which lost $2 billion dollars.
"The JPMorgan debacle makes a strong case that megabanks need a higher capital standard. Frankly, I don't have any confidence that our regulators can predict the next crisis. But if the megabanks are required to have more capital, we'll either incent them to become smaller or help ensure that they can weather the next crisis without a taxpayer bailout," said Vitter.
Capital is essential to withstand inevitable bank losses. In the 1920s and 1930s the big New York banks held far more capital than they do today, which enabled them to survive the Great Depression. Capital at the megabanks gets depleted by trading losses or loans going bad, which puts taxpayers at risk by the too big to fail banks.
Testifying at the Banking Committee hearing titled, Wall Street Reform: Enhancing Bank Supervision and Reducing Systemic Risk are representatives from the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Treasury, Consumer Financial Protection Bureau and the Federal Reserve.