May 14, 2012

Sheila Bair On How JPMorgan Chase Makes Money

Sheila Bair ex-FDIC on how JPMorgan Chase makes money. 

The Fed can print lots of money, but it cannot control what is done with it. Instead of supporting new lending for healthy, sustainable economic growth, those newly minted trillions can just as easily support asset bubbles and irresponsible lending and risk taking by yield hungry financial institutions and investors. Near zero interest rates discourage savings and weaken pension funds. At the same time, they encourage highly leveraged speculative investments based on short-term price fluctuations, not long-term economic fundamentals.

The major road blocks to America's economic future lie with inefficiencies in the tax code, unsustainable defense and entitlement spending, and most importantly, massive uncertainty on the part of both businesses and households over how or even whether these core issues will be resolved.

Sheila Bair was arguing for higher interest rate in the article in a somewhat convoluted way but the scenarios she describes applies to what is happening with JPMorgan Chase and the other banks.

Tags: sheila bair on higher interest rates, sheila bair on economy, sheila bair on jpmorgan chase