Jamie Dimon, the chairman and chief operating officer of JPMorgan Chase, has a reputation as one of the brightest and most articulate of Wall Street bankers. He has also been one of the fiercest opponents of increased regulation of the banking sector following the Wall Street collapse of 2008. In mid-May he confessed a $2 billion loss in derivative trading by the bank’s London office and predicted the losses “could double within the next few quarters.” Perhaps the most disturbing aspect of this latest Wall Street drama is that Mr. Dimon and other major players at JPMorgan seem unable to explain precisely how the losses occurred.
The accounts, Mr. Dimon acknowledged, were badly managed and poorly supervised, but he failed to note that the losses came from a product that insures trades in other securities, similar to those that produced the financial crisis. He did admit, however, that the timing of the loss was a gift to the proponents of regulation. We agree.
That four years after the Wall Street debacle, the chairman of a leading bank that escaped the crisis unscathed could admit to trades that were “stupid” and “sloppy” is a clear sign that self-regulation in today’s massive, computer-driven markets is insufficient. The need for tougher, not weaker, regulation is clear. Only a Dodd-Frank Act on steroids, including a fully empowered Volcker Rule ban on proprietary trading by commercial banks, will reinstate the common-sense controls lost in the ill-advised 1999 repeal of the Glass-Steagall Act. To be effective, these must be backed by adequate staffing and funding for regulators. It is apparent that bankers still need to be protected from themselves, and U.S. taxpayers deserve to be protected from another costly bail out.
The Price Is Not Right
The educational debt burden shouldered by U.S. college students finally may have caught the nation’s attention. Student loan debt, at more than $1 trillion, has surpassed credit card debt in size. And the high rate of default among student borrowers is rising. A less obvious factor is the growing number of for-profit colleges, which enroll 11 percent of college students. These students receive a quarter of federal college loans, yet many drop out of college with debt but no degree. Consequently, they default at a much higher rate than graduates. Congressional bills that would tie the availability of federal student loans to a college’s own graduation rate and/or student loan default rate ought to be passed for the sake of student borrowers and taxpayers alike. Still, the issue of student debt touches something deeper than the staggering sum owed.
The bottom line is not merely financial. Rather, U.S. society must decide a question of values: Is an affordable college education for qualified applicants a national priority? Only an educated society can compete globally or play a leading role on the world stage. If affordable education is not a priority, then state and local governments will continue to pass the burden to their colleges, which will pass it on to their students. Already state and local government spending per college student is lower than it has been for the last 25 years. If affordable education is a priority, however, then citizens will have to elect leaders who support public colleges students can afford.
A Yes to Dialogue
Pope Benedict XVI has put a priority on dialogue with the unbelieving world. For that reason, he expanded the Pontifical Council for Culture with an initiative, called The Court of the Gentiles, to improve communication between believers and nonbelievers, which is often impaired, in his words, by “mutual ignorance, skepticism or indifference.” To lead that dialogue, he appointed Cardinal Gianfranco Ravasi, whose leadership has met with widespread praise. When critics challenged the inclusion of nonbelievers in the interreligious witness to peace in Assisi last fall, the cardinal defended Pope Benedict XVI’s initiative as “an attempt to reassert the importance of the relationship of faith and reason.”
When controversies broke out lately over invitations by the Pontifical Academy for Life and the Council for Culture to scientists whose research, especially on stem cells, was thought to contravene Catholic teaching, the cardinal rose to give a vigorous defense of dialogue with the church’s ideological opponents. “It’s a shaky or fundamentalist grasp of faith that sparks suspicion or fear of the other,” Catholic News Service reported the cardinal saying. “When you are well formed, you can listen to other people’s reasons,” he added. Solid, serious catechesis is compatible with respectful dialogue.
At a time when it seems that rote repetition of catechetical formulae is more and more expected of even the most educated Catholics, the cardinal’s openness to dialogue and his trust in Catholics of mature faith and learning to carry on such dialogue are reassuring. In the modern world, the scandal is not that Vatican officials would engage scientists who disagree with church teaching, but rather that such engagement is regarded as taboo.