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"Wall Street must not be allowed to escape tough new laws on trading in the wake of the $2bn loss at JP Morgan Chase's London-based trading group, leading senators said Thursday. In a press conference, senators Carl Levin and Jeff Merkley said they drew up the so-called Volcker rule in order to curtail bets like the one made by JP Morgan. But they said financial lobbyists had successfully watered down the rule, which is supposed to be applied from July. \"This really is a textbook illustration of why we need a strong Volcker rule,\" said Merkley. \"In the words of JP Morgan's chief executive he had a strategy that was, quote 'flawed, complex, poorly reviewed and poorly monitored'. And if that sounds eerily familiar, it's because it is an exact description of the type of risk-taking that got us into this financial crisis and recession.\" The losses, which are expected to grow, come as regulators are drafting the Volcker rule, which aims to limit the bets that banks can make with their own funds &amp;ndash; something known as proprietary trading. The rule is part of the 2010 Dodd-Frank Act introduced after the credit crisis. JP Morgan chief executive Jamie Dimon has been a harsh critic of the Volcker rule, named after its original proposer Paul Volcker, Federal Reserve chairman under presidents Jimmy Carter and Ronald Reagan. Dimon has led a Wall Street fight back against regulation following the credit crisis. Earlier this year he said Volcker \"doesn't understand capital markets\". JP Morgan, Goldman Sachs and other Wall Street banks have been lobbying hard for exemptions to the rule. Levin said Dimon had argued for the repeal of Dodd-Frank and is also against regulation of derivatives and greater oversight of overseas outposts like London. \"All three of those positions have been dramatically proven to be wrong,\" said Levin. \"There are people who want to go further than this. We have a candidate for president who wants to wipe out the whole law. Romney wants to create not just a loophole, he would repeal Dodd-Frank, which would remove the possibility that we would get a cop on Wall Street.\" Levin said the JP Morgan loss was a \"stark example\" of what can happen without proper regulation. \"This was a major bet on the direction of the economy, and when those kind of bets are lost, we all pay the price,\" Levin said. He said US taxpayers had been forced \"not too long ago\" to bail out banks that had made these type of bets. \"And we don't want to be put in that position again.\" Levin said Wall Street lobbyists had pushed for the Volcker rule to be watered down in order to allow hedging on a \"portfolio basis\". Under the original proposal banks were allowed to hedge against trades in case they went wrong, but only on an individual basis. The amended language now being considered would allow hedging against a portfolio of investments. \"That is a big enough loophole that a Mack truck could drive right through it,\" Levin said. \"Once you talk about portfolio hedging, you are talking about an activity that can hide a vast amount of proprietary trading,\" said Merkley. \"The draft rules at this point are way too lax.\" Merkley said hedge funds were free to make these kinds of bets. \"The point is that it doesn't belong in a traditional banking system that is subsidised by the taxpayer.\" Nell Minow, co-founder of corporate GMI Ratings, said the JP Morgan fiasco was a prime example of why the Volcker rule should be tightened up, but she doubted Washington had the political will to act. \"The financial services industry has proved itself extremely creative when it comes to getting around regulation,\" she said. \"Obama won't go up against Wall Street in an election year. Neither side has really shown any willingness to take this on.\" The Volcker rule was taken up by the Occupy movement earlier this year, angered by what its members saw as Wall Street's successful attempts to water down the regulation. Occupy the SEC, a working group of Occupy Wall Street that includes former financial industry professionals and lawyers, sent a 325 page letter to the SEC outlining in detail how they felt the rule had been enfeebled. This article was written by Dominic Rushe in New York, for guardian.co.uk on Friday 11th May 2012 19.55 Europe/London    guardian.co.uk &amp;copy; Guardian News and Media Limited 2010  &amp;nbsp; And the Best Place to Work in the global financial markets 2015 is..."^^<http://www.w3.org/2001/XMLSchema#string>
<http://www.hitc.com/en-gb/2012/05/12/senators-slam-jp-morgan-over-london-losses-and-demand-tighter-re/>