For the vast majority of Americans — 99 percent, to borrow a phrase — banking is commercial and relatively simple. A checking account, a savings account, a credit card or two. A mortgage, a small-business loan or a line of credit for daily business cash flow.
But at the 1 percent level, where investment banking is done, banking is extraordinarily complicated and extraordinarily rewarding. The risks, as the nation discovered in 2008, are hideous, but that’s what the public is for.
This is why JPMorgan Chase’s admission Thursday that it had suffered a $2.3 billion loss and an $800 million gouge in its earnings from unmonitored derivatives trading is so distressing. The bank was playing with house money, not client money, and at least some of it was commercial deposits insured by the federal government.
It was as if the 2008 financial Login to read more