With the startling news last week of JP Morgan Chase’s $2 billion trading loss and the attention the bank has earned in the fallout from politicians, the news media, and even President Obama, it is all the more startling to notice, in comparison, just how little attention California Governor Jerry Brown has received for his $16 billion deficit blunder.
Even worse, Governor Brown’s financial loss will foot the bill to California taxpayers, whereas JP Morgan’s mistake was only a hit to the bank and its investors.
Following Thursday’s announcement of the bank’s massive trading loss, media coverage has been extensive.
JP Morgan CEO James Dimon joined host David Gregory Sunday on “Meet the Press” to account for his role in the mishap, confessing to “errors, sloppiness and bad judgment” that led to the massive loss.
Congressman Barney Frank, a sponsor of the 2010 Dodd-Frank financial reform bill, showed up Sunday on ABC’s “This Week” to make the case for increased regulation of derivatives trading and to skewer Republicans for their carelessness and support of less regulation.
On Monday, even President Obama came out to say that the JP Morgan loss is an example of the need for more regulation of Wall Street.
All in all, the loss of $2 billion of investors’ money by JP Morgan is dominating the news cycle, has put CEO James Dimon on the chopping block, triggered the resignations or "retirements" of high-ranking staff, and incited politicians from both the left and right to do battle over regulation.
Yet, at the same time, there was another news story over the weekend that has, in contrast, received much less attention than the J.P. Morgan circus. On Saturday, California Governor Jerry Brown announced that his state’s projected budget deficit will not be $9 billion as he originally predicted in January, but instead $16 billion. That’s a $7 billion accounting error.
To make up for this gap, Governor Brown is handing the bill to California taxpayers, proposing to raise taxes to pay for the deficit when Californians are already suffering from painful 11% unemployment.
To be clear, Governor Jerry Brown’s miscalculation is costing California an additional $7 billion – an amount three times that of JP Morgan’s recent loss. His total deficit, $16 billion, is eight times greater than JP Morgan’s error.
But despite the failure on the part of Governor Jerry Brown, the usual suspects in politics and the media, who are seemingly always so concerned about accounting and regulation, are silent.
Where is the political scrutiny?
Where is the fallout?
Where is Barney Frank calling for more accountability on the part of Governor Brown when it comes to managing his state’s budget?
When it comes to California’s governor it is doubtful that he, unlike JP Morgan’s top leadership team, is considering handing in his resignation on account of his irresponsible mathematical error.
It’s time to stop with the political opportunism and the punditry and get serious about budgets and math.
If the $2 billion loss by JP Morgan is such a travesty because of the risk it poses to the greater good, then our political leaders should be that much more irate – eight times more irate to be exact – about the risk that Governor Brown is posing to the citizens of California with his $16 billion deficit. But so far it hasn’t been about numbers, it’s been about politics.
It is true that JP Morgan’s loss is the perfect opportunity for politicians and pundits to hash out their feelings about financial regulation.
But it is also true that California’s $16 billion budget deficit is as great an opportunity for the state’s citizens to air their feelings about Governor Brown and their local leaders. Because while opportunistic politicians and the news media are distracted by the drama surrounding JP Morgan, California’s citizens are faced with the daily grind of looking for jobs, paying over $4 for a gallon of gasoline, getting trapped in mortgages that are underwater, and dealing with a governor who just told him they’re going to have to pay an extra $7 billion more than the $9 billion they expected.
And while they may not get invited on the Sunday talk shows this week or earn a statement from President Obama that this shows the need for better governors who can balance a budget, California citizens and taxpayers can make a big deal out of their own financial loss by expressing themselves and their opinions on their ballots in the next election.
Michelle Selesky is the Communications Director for GOPAC, the Republican Party's premier center for educating and electing leaders to state and local offices. She is a native of California.