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Updated: Thursday, June 14, 8:44 AM JPMorgan Chase chief executive Jamie Dimon faced a reckoning in Congress on Wednesday, learning that emotions in Washington are still raw four years after the financial crisis and that politicians are still hotly debating the government’s response. In contrite and straightforward testimony, he apologized for the bank’s $2 billion or more in trading losses last month, saying they were the result of an errant strategy at a unit that was supposed to reduce risk. He said the bank may take back some of the payments made to employees involved in the strategy. He said it had all been “embarrassing.” Some on the Senate Banking Committee demanded more. “When those bets go bad, instead of taking responsibility for it, you blame it on the unit that you set up?” asked Sen. Jeff Merkley (D-Ore.). “Shouldn’t you take personal responsibility since they were following the game plan that you personally laid out?” “We made a mistake. I am absolutely responsible,” Dimon said. “The buck stops with me.” A Democrat once close to the White House ? President Obama called him one of the “smartest bankers” just a few weeks ago ? Dimon has become one of the harshest critics of the administration’s signature overhaul of financial regulation, known as Dodd-Frank. But as JPMorgan’s big trading loss renewed political pressure for greater oversight of Wall Street, Dimon has silenced his usually fiery critique of Washington intervention. On Wednesday, Republicans pushed him to blast it again. The now-chastened Dimon was reluctant. “Has Dodd-Frank more than marginally made our banking system safer?” asked Sen. Bob Corker (R-Tenn.). Dimon noted he had supported some elements of the bill. Corker asked again. Dimon dodged. A third time: “Has it made our system safer?” “I don’t know,” Dimon said. But Democrats were quick to remind Dimon that they had enacted the financial overhaul because banks had gotten themselves into such a mess in 2008. Democrats are pushing for a tough interpretion of the Dodd-Frank law, while regulators fill in the details. A core and unresolved question is whether the Volcker Rule, a provision, opposed by Dimon, that would ban banks from speculating with their own money, would have prevented the activity at JPMorgan. After Dimon told lawmakers that JPMorgan had a “fortress balance sheet” despite the recent loss, Sen. Robert Menendez (D-N.J.) told him he was playing “Russian roulette.” He added, “I’d like to remind you that fortress balance sheet has a moat that was dug by taxpayers to the tune of $25 billion in bailout money and more than $450 billion in loans from the Fed.” Menendez was referring to the Bush administration’s investments in JPMorgan and most other major banks as part of the Troubled Assets Relief Program in 2008, as well as emergency Fed lending to banks during the crisis. Merkley later pressed that same point, and Dimon showed his frustration. “Wouldn’t JPMorgan have gone down without the massive federal intervention, both directly and indirectly in 2008 or 2009?” Merkley asked. “I think you were misinformed, and I think that misinformation is leading to a lot of the problems we’re having today,” Dimon told the senator, saying that JPMorgan took money only at the request of policymakers in Washington. When Dimon continued to press the point, not allowing Merkley to interject, the senator declared, “This is not your hearing!” “If you had applied that Old Testament justice in 2008-2009, JPMorgan would have gone down and you would have been out of a job,” Merkley continued. Even though it was the topic of the discussion, Dimon gave relatively few new details about what had transpired in the bank’s Chief Investment Office, where the bad trades occurred. The Justice Department is looking into the matter. He said the office, which invests $350 billion as part of what is supposed to be a “conservative” strategy, had a portfolio of highly complex investments that are supposed to guard the overall firm from major risks such as the financial crisis in Europe. But he said the strategy was “not carefully analyzed” or scrutinized within the unit. Nor was it reviewed by others at the bank ? including Dimon himself. The traders failed to understand the risks they were taking and did not appreciate the implications of swings in the market that caused big losses, he said. “This portfolio morphed into something that, rather than protect the firm, created new and potentially larger risk,” Dimon said in his remarks. Dimon also said the firm’s process for evaluating risks failed in this case and the chief investment officer, and especially the portfolio that caused the losses, “should have gotten more scrutiny from both senior management and the firmwide risk control function.” “We have let a lot of people down, and we are sorry for it,” Dimon said in prepared testimony. “We will not make light of these losses, but they should be put into perspective. We will lose some of our shareholders’ money The e-commerce company in China offers quality products such as Piston Pump Parts Manufacturer , Hydraulic Gear Pump Manufacturer, and more. For more , please visit Sauer Pumps today!
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