Former U.S. Senator Christopher Dodd weighed in on JPMorgan Chase's much-publicized trading loss Thursday, pointing to it as validation of the need for the landmark financial reform legislation he co-authored.
Meeting with a reporter after a speech in Moscow, Dodd said that the estimated $2 billion JPMorgan Chase (JPM) lost on trades made by its chief investment office is proof that Congress needed to take action to prevent large banks from taking excessive risks. The Dodd-Frank Act, which Dodd co-wrote with Rep. Barney Frank (D-Mass.), includes a provision that would place significant restrictions on banks' proprietary trading, though regulators are still working out the details on how the so-called Volcker rule would be implemented.
"This was a big deal, it might have sounded like a minor glitch but there were some major commitments made here," Dodd told Reuters when asked about the JPMorgan trade. "It is indicative to me of the importance of the legislation that I co-authored."
Dodd is a longtime Connecticut Senator who now heads the Motion Picture Association of America. His comments echoed those of former Federal Deposit Insurance Corp. Chairman Sheila Bair, who said Thursday that commercial banks should focus on banking, not trading for their own benefit.
"Don't let insured deposits fund that activity," Bair said at a roundtable on the Volcker rule held by staff of the Commodity Futures Trading Commission.