In the wake of J.P. Morgan's 2 billion dollar screw up, it is imperative to remind ourselves that the de facto position of the Republican Party is that the reckless actions that result in these kinds of losses should go unregulated.
The anything goes atmosphere leading up to 2008 was, of course, a bipartisan phenomenon, as much a fault of the Clinton Administration as any other. But since 2008, the Democratic Party, however fitfully and timidly, has moved in the direction of re-regulating the financial industry. Dodd-Frank, that Republican bogeyman, attempts to curb the most dangerous excesses of the banks, while providing means for the federal government to wind down too big to fail institutions.
The problem with Dodd-Frank is that it's not tough enough, and future bailouts remain likely. But that's not why the Republicans don't like it. They don't like it because they think it's too tough. They are against more regulation, and think that when their free market policies inevitably lead to more bank failures, those institutions should be allowed to fail, bringing down the whole economy with them.
The thinking seems to be, yeah it'll be painful, but they won't try that again! The moral hazard problem will be dealt with. But the reality is that no administration, including a conservative one, is going to let the economy implode on its watch just so the banks can get what they deserve. The bailouts will come. Better to have robust regulations in place to prevent the banks from engaging in systemically risky behavior in the first place, and a plan to prevent economy-wide infection should those regulations fail.
The other aspect of this that is not often remarked upon is that the average Republican voter continues to harbor significant animosity and distrust toward the big banks and does not know that their party is in the banks' back pocket. They honestly don't know. Of course, we're all in trouble because the Democrats have only marginally crawled out of the other pocket.
The extent to which our political system is in thrall to the financial industry is deeply troubling. If we're to judge by their public statements (and books) the big bankers are distinguished primarily by their unusual capacity for arrogance, insularity, and willingness to do really stupid things with other people's money. And for this they wish to be admired.
Not to put to fine a point on it, I honestly have more respect for prostitutes and drug dealers trying to get by than I do for a lot of these bankers. They're truly contemptible.