Will JP Morgan’s malfeasance lead to …

Any tightening of regulations, probably not, says Paul Krugman. And we agree.

I haven’t weighed in on the JPMorgan stuff, because I haven’t had time to figure out the whole thing. I would say that I’ve always wondered why Jamie Dimon had such a reputation for smarts, since nothing I’ve seen seemed to justify the reverence; maybe nothing did.

But an interesting parallel struck me here: I wonder whether the people who go on and on about the much smaller loss at Solyndra, the case that launched a thousand hearings, will get comparably worked about on this case (actually I don’t wonder — they won’t).

The obvious objection is that the government lost money on Solyndra, but hasn’t (yet?) on JPMorgan. But that’s less true than meets the eye. Solyndra was a small part of a broad program of loan guarantees, which inevitably ran the risk of loss — otherwise those guarantees wouldn’t have been worth anything, would they? And it was the only loss.

And JPMorgan is also part of a broad program of guarantees, explicit on deposits, implicit through the general aspect of too-bit-to-fail. There have been government losses on these programs, and will be in future — and misbehavior like what seems to have happened here feeds such losses. And as best I can tell, JPMorgan’s story looks a lot more like actual malfeasance.

But of course JPMorgan wasn’t doing do-gooder liberal stuff like solar, it was just engaging in financial tricks of little or no social value. That makes it all OK.

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