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09:42 AM
Phil Albinus
Phil Albinus
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What If Goldman Sachs Lost a $2 Billion Bet?

Wall Street golden boy Jamie Dimon is in a PR nightmare - usually the realm of Goldman Sachs. What would the reaction be if the CEO in the penalty box were Lloyd Blankfein?

Somewhere Lloyd Blankfein must be breathing a sigh of relief.

When there's bad behavior on the Street, it usually emanates from the Wall Street firm that is the most feared and most hated: Goldman Sachs. Well, not exactly but it often feels like that. After all, what other Wall Street behemoth has been likened to a vampire squid or has seen a former trader resign and reveal secrets in the op-ed pages of the NY Times? Other investment firms share many of the same practices of the Goldman's but they don’t have their Darth Vader-like reputation.

(Could it be a touch of anti-semitism? There's enough there for a slew of blog posts but not now.)

Instead a leading trader inside JP Morgan Chase's London office lost a $2 billion bet and three leading JPMC execs have lost their jobs. (But not the trader – hmmm.) If this were Goldman Sachs, would the president of the United States have said this about Goldman Sachs CEO Blankfein?

"JPMorgan is one of the best managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got."

There is no way that Obama would say that about Goldman Sachs, no matter how much the president needs to woo Wall Street dollars for his re-election. Praising Goldman Sachs would be like seeking the endorsement of a vocal anti-gay marriage activist or a critic of Obama's health plan who thinks it reeks of 'socialism.' Sadly, Goldman Sachs is too radioactive.

This is also a tricky spot for Obama. After his comments on Jamie Dimon, he added:

"And they still lost $2 billion and counting."

"You could have a bank that isn’t as strong, isn’t as profitable managing those same bets and we might have had to step in," Obama continued. " That’s why Wall Street reform is so important."

Reforming Wall Street is important – but so are their deep pockets. After delivering a commencement address at Barnard College and appearing with the women on The View, where he made these JPMorgan comments, the president attended a fundraiser with a top hedge fund firm.

As much as Obama wants to keep Wall Street in line and reign in their risk, he wants them to bet on his campaign, which is right now a tied-race in the polls.

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio
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