The JPMorgan fallout continues this morning with an FBI source telling CNN that the agency is looking into the company’s two billion dollar trading loss.
Economists and lawmakers continue to debate as to whether or not the trades that led to the losses would have violated the so-called Volcker Rule.
University of Chicago economics professor Austan Goolsbee weighs in this morning, saying that he would “hope that since the Volcker Rule is designed exactly for the type of event that we just witnessed, that it would be tough enough to apply some deterrence value” to the bank’s decisions.
Goolsbee also discusses the push to break up banks that are “too big to fail,” explaining that he believes that the phrase is incorrect and leads the public to the wrong conclusions.
“You could break up the biggest banks like Bank of America into six different pieces and every one of those pieces would still be bigger than Bear Stearns when it went under,” Goolsbee explains. “If you had ten smaller banks that are collectively the same size to the system as the big bank, then you could still have the problem.”