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Friday, June 15, 2012


Larry Downing / REUTERS
J.P. Morgan CEO Jamie Dimon testifies before the U.S. Senate committee.












JPMorgan's Dimon testifies on Hill about losses



2
days
ago
By msnbc.com staff
 Updated at 12:20 p.m. ET: The Senate hearing has now ended, and the market appears to be applauding J.P. Morgan CEO Jamie Dimon's performance before the banking committee Wednesday.
Shares of J.P. Morgan rose over 1 percent to $34.23 in trading Wednesday.
Earlier, responding to a question from Sen. Michael Bennet, D-Colo., Dimon took a page out of Fed Chairman Ben Bernanke’s book and talked about the “fiscal cliff” looming in the new year, when tax cuts and automatic spending cuts will hit simultaneously.
Bernanke has warned that the recovery could suffer because of it and has urged Congress to take steps.
Dimon said, “The fiscal cliff may not wait until Dec. 31.”
He said Congress better do something now before markets and businesses themselves take steps.
He touted the Simpson-Bowles deficit reduction plan and said the specifics are not as important as getting something done.
Sen. David Vitter, R-La., just asked if Dimon thought there could be a “true version” of the Volcker rule, which is named for former Fed Chairman Paul Volcker and is intended to reduce risky trading by banks with customer deposits.
Dimon said: “I think we’re going to really struggle to get it right.”
Vitter asked: What if we were to start with a blank page and rewrote it?
“I think it’s unnecessary,” Dimon said. “It’s just too confusing.” He said risk could be controlled with proper capital and risk controls.
A testy moment when Sen. Alan Merkley, D-Ore., asks Dimon about TARP (the Troubled Asset Relief Program), which was used by the U.S. government to purchase assets and equity from financial institutions to strengthen them during the 2008 financial crisis.
Dimon angrily said his bank did not need TARP, but was asked to accept it by “the Treasury Secretary of the United States.”
Merkley tried to stop him from elaborating, saying: “Sir this is not your hearing.”


Sen. Jerry Moran, (R-KS) asks how Jamie Dimon manages a firm the size of JP Morgan and how to prevent taxpayers from bailing out big banks.
Sen. Jon Tester, D-Mont., questioned Dimon about what JPMorgan knew and when concerning MF Global, which went bankrupt after bad bets on European debt and lost $1.6 billion of clients’ money.
Tester queried why JPMorgan took so long to return millions of dollars it got in the final days of MF to the court-appointed trustees. Dimon said the bank has cooperated with the trustees and that the bank was awaiting guidance on the money.
He also said that he hoped the farmers who lost their money in the debacle would get all their funds back. “I still think they will,” he said.
Sen. Herb Kohl, D-Wisc., grilled Dimon on problems in the industry concerning mortgage loan paperwork and on foreclosures. He said one of his constituents wrote to him about losing her home because of bad paperwork. Dimon told the senator to send him the information and he’d “take care of it.”
“We were not very good at it when the problems started,” he said, referring to the onset of the real estate crisis, but has improved.
“We’re doing it better. We’re doing it faster,” he added.
Sen. Mike Johanns, R-Neb., asked Dimon how many regulators JPMorgan has on site. Dimon responded that he believes there are hundreds of them.
“We have people who are assigned specifically to deal with regulators and we deal with them,” he said.
Dimon estimated that regulations cost JPMorgan about $1 billion a year globally for approximately 8,000 programs. He said JPMorgan will comply with all the regulators “but it will be costly.”


Sen. Jim DeMint, (R-SC), asks JPMorgan's CEO what Congress needs to do to make the system operate better.
Sen. Jim Demint, R-S.C., took aim at Dodd-Frank financial reform, as have others on the committee before him.
He asked Dimon:
“What do you think we need to do or take apart of what we’ve already done” to allow the industry to operate better and not put taxpayers at risk.
Dimon responded:
“I believe in strong regulation,” but not necessarily more regulation. “I would prefer a simple, clean ,strong regulatory system,” he said.  “And that’s not what we did.”
He said that it’s not clear to him who has the regulatory responsibility.
Senator Bob Menendez came out fighting, saying J.P. Morgan’s “fortress balance sheet” has a “moat dug by taxpayers,” noting that the American taxpayer have played a big part in keeping his Dimon’s bank healthy.
He has also accused Dimon of calling capital rules for banks “anti-American.”
Dimon, demonstrating some annoyance, denied the charge.


Sen. Robert "Bob" Menendez wants to know if hedging is really "gambling" and asks Mr. Dimon about his critical comments on enhanced banking oversight.
Earlier, Dimon said he doesn’t think regulators couldn’t have caught the risky trades that led to the multi-billion dollar losses at JPMorgan.
He said regulation is a matter of “continuous improvement.”
When asked if Dodd-Frank made the financial system safer, Dimon, who appeared to be trying to avoid answering the question responded, “I don’t know.”
New York Sen. Chuck Schumer asked Dimon: What’s to stop the big trading losses at J.P. Morgan from happening again?
“Were we just lucky that we find out about this when we did?” he asked.
“We weren’t just lucky,” Dimon responded. He added that banks are better capitalized, risk committees are more engaged. A lot of the controls have happened already in companies across America since the financial crisis.
Schumer asked Dimon about clawbacks -- efforts to recover compensation paid to employees who engaged in risky behavior that negatively impact companies and their shareholders.
“Seems that’s an appropriate thing to do,” he said and asked Dimon how it how it works.


Sen. Chuck Schumer, (D-NY) asks Mr. Dimon about what went wrong with the risk committees at JPMorgan and how improvements can be made going forward.
Dimon said that here are several layers, but for senior people we can claw back for bad judgment.
“It’s pretty extensive,” Dimon said. He said the board will review every single person in the current situation and what they did. He added that the firm’s new claw back policies have not been used yet.
On the Volcker rule to restrict trading by banks in certain kinds of speculative instruments and so reduce risk, Dimon said.
“It’s hard to make a bright line between proprietary trading and hedging.”
He also said that he understands the intent of the Volcker rule.
“The devil will be in the details,” however, he said.
Senate Banking Committee Chairman Tim Johnson opened the questioning of JPMorgan Chase’s Chairman and Chief Executive Jamie Dimon.
Johnson asked Dimon about his “tempest in a teapot” comment -- the phrase he used to brush off early media reports of the multibillion-dollar losses, which have been attributed to a London-based section of the bank.
“When I made that statement, I was dead wrong,” Dimon told Johnson.


Sen. Tim Johnson asks Jamie Dimon, what did you know when you made your "tempest in a teapot" comment?
Dimon explained that when the trading issues first arose, he was assured by his lieutenants at the bank that it was an isolated incident.
Johnson also asked Dimon about the changes the bank made in its risk models in January, and also whether the bank’s compensation structure incentivized risk-taking and whether the trading debacle will lead to “clawbacks.”
Dimon said it’s “likely, though subject to board, that there will be clawbacks.”
At the start of the hearing, Dimon read his prepared testimony for the Senate hearing, in which he apologized for the bank’s mistakes and said JPMorgan’s trading loss happened because poorly managed traders in January started an unwise hedging strategy they did not fully understand.
You can watch his opening testimony here:


JPMorgan CEO Jamie Dimon testifies before the Senate Banking Committee on what went wrong at JPMorgan.

If you haven't had enough of the videos above, here is the whole hearing

Washington, DC
Wednesday, June 13, 2012
JPMorgan Chase CEO 

James 'Jamie' Dimon went before the Senate Banking, Housing and Urban Affairs Committee Wednesday to provide a better understanding of the company’s recent massive trading loss.
On May 10, JPMorgan Chase announced approximately $2 billion in trading losses from a complex trading strategy. The FBI and other government agencies are investigating the matter.
This was the first time JPMorgan’s President and CEO appeared before Congress to answer questions concerning the bank’s trading loss. As Dimon walked to the witness table, he was heckled by protesters.
Mr. Dimon said the problem was within the Chief Investment Office (CIO) and its synthetic credit portfolio.  In December 2011, the CIO was asked to update its risk models to comply with Basel rules. These models which were approved involved a strategy that called for adding positions to the synthetic credit portfolio in hopes of offsetting existing ones. He added that this strategy clearly didn’t work, was too risky, and resulted in the massive losses.
The witness admitted to Senate lawmakers that this portfolio should have been monitored more closely by senior management including him.  He also stressed multiple times throughout the hearing that the losses was an “isolated incident” and immediate corrective action was taken to re-implement the old risk models which Mr. Dimon said worked well.
He has testified before Congress several times on a variety of economy-related issues.  During questioning, several Committee members asked him about the use of taxpayer funds to boost lending rates and press him on JP Morgan Chase's commitment to cooperate with the government.
The Committee will take his testimony into account as lawmakers continue to conduct oversight over the full implementation of Wall Street reform.
Updated: Wednesday at 1:47pm (ET)
 



 Some comments
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Hello folks, Jamies Dimon knows just like John Corzine knew that nobody with their connections have been held accountable for stealing the investors money. This movie has been played out over and over again where the constable walks up to the angry masses and says "Go home folks, nothing to see here".
When will the people with the pitch forks show up and actually do something about all the larceny and corruption being perpetrated right in front of our eyes each and every second of the day?
Our corrupe political system has turned into a two headed one party system serving their masters the banksters/Federal Reserve and Wall Street. You know their motto, privatize profits and socialize losses. Aren't you tired of getting screwed?
#1 - Wed Jun 13, 2012 11:10 AM EDT

Trust- Agree with you on this one, but let's think this one out a bit.
Let's say that JP Morgan just simply screwed up and made some reckless, bad bets on the market. Say that they can prove it, whereas MF Global just said "oops" in front of Congress, then Corzine disappeared. I think it is possibly two different things. Corzine made a quick statement and was let go by the administration and the media, JP Morgan is getting strung out and strung up. Both lost billions in investor money, so why are they being dealt with differently??
I do think that the DC politicians are playing games to protect their "investors" aka donors. Where are their kids going to get plush jobs if they can't parlay their power. Just like they villify the top earners while being some of the top earners. How they demand "change" and regulations on businesses, while investing based on their closed door dealings and profiting from those changes. How they regulate industries by Congressional committees, and just happen to have family that will benefit those decisions.
The career politicians are definately part of this problem and dynamic.
#1.1 - Wed Jun 13, 2012 11:43 AM EDT

People forget,.. just as ceo's are fond of saying employees comp packages take
away from the share holders return,.. so does lobbying costs and influence buying.
Sooo,.. ultimately,.. we,. the consumers,. pay for THIS cost of gov't.! Every
election's a transfer of wealth to media monopolies. Where's TR? Resurrect him now!
#1.2 - Wed Jun 13, 2012 12:07 PM EDT

I'm going to sell pitchforks at my pitchfork booth at both parties' conventions this year.
#1.3 - Wed Jun 13, 2012 12:19 PM EDT

It's only a matter of time before the pitchforks come out. The self-righteous arrogance of these SOBs is stunning. This same arrogance has gone on by the super wealthy for thousands of years. You'd think they'd realize they need a healthy middle class to survive...they just think they are the deserving ones and everyone owes them something...you'd think "Let them eat cake" would be burned into their minds...just amazing how insulated they are....
#1.4 - Wed Jun 13, 2012 12:57 PM EDT

This guy is a GD pied piper! He says we need stronger regulation and not more. He's right but he also knows that "strong" regulation is impossible because the people who can do the heavy lifting are in his pay grade! Would you trade your Wall Street pay grade for a government regulatory job? No sir...
The revolving doors will continue to spin...
#1.5 - Wed Jun 13, 2012 1:03 PM EDT
The "Market" is Necrophilic.
Republicons worship the "Market".
Transitive Property of Equality:
Republicons are Necrophilic.
#1.6 - Wed Jun 13, 2012 1:16 PM EDT

As you could see from Demints (Demented) comments, the ultra right wingnuts think we need to ditch ANY regulatory efforts that have been made since the start of the recession. These guys like Dimon know exactly how to get around the regs that were in place. While the new one's may not be perfect, they at least bring some of these shady dealings into the open. Now if they will just do the same for all hedge funds.
Reps ALWAYS preach self policing, but it absolutely NEVER works. Greed always takes over.
#1.7 - Wed Jun 13, 2012 1:36 PM EDT
Anyone who tries to compare Corzine and MF Global to Dimon and JPMorgan is only displaying their rampant ignorance about the financial markets. Corzine (a former wild risk taker from Goldman) took over MF Global (a sleepy vanilla fund that was known for being a super low risk organization, thus the place where farmers wanted to put their money to be safe) and directly instructed his people to engage in a series of illegal and high risk trades with funds that belonged to MP's clients, not MF's own funds. In contrast, Dimon has run JPMorgan very conservatively and the hedge trade that cost the bank $2+B recently was done with JPMorgan's own money (not its client's money) and was not done with the knowledge or blessing of Dimon. Slight difference. Corzine/MF Global lost people's money and savings. JPMorgan only lost its own money not any of its customers' money (even though it damaged its stock price in the long run). BIG difference. But hey, to most of you people the crime lab on CSI Miami is real and the U.S. Air Force has phasers and can teleport places...
#1.8 - Wed Jun 13, 2012 1:59 PM EDT
Senate committee, huh? What a bunch of jerks trying to pin stuff on others thereby pointing away from their stupidity and inadequacy.
Sad that these clowns were voted in by Americans! Sad, very sad!
#1.9 - Wed Jun 13, 2012 2:05 PM EDT
the VOLKER rule (which the banks are doing everything to discourage), is a re-enactment of the Glass-Stegal act, that is it; it would put the brakes on the gambling venture that they are all involved in; the congress was up their beating their chests, trying to make believe they are involved, hell, they caused this collapse.
#1.10 - Wed Jun 13, 2012 3:15 PM EDT
There is one thing we undeniably have to agree with... we do need simpler rules. Large convoluted rules do not solve the problem as we hope they would... they seem to create "opportunity" (as a bank would probably call it). Some of us on the other hand refer to it as "risk". The simpler the rules, the clearer the line. Does this mean that the rules are less likely to be broken? Nope, but the ability of using one rule to protect you from what you have done is less likely...
#1.11 - Wed Jun 13, 2012 3:20 PM EDT
Corzine is a thief of the worst sort. The only reason he's out walking the streets is because he had Obama's blessings. He is ONCE again bundling for Obama, despite the billions he lost and 'didn't know where the money went' BS excuse. and never got prosecuted for. Talk about crooks getting away with their crimes. Corzine is the poster child for amnesty and non-prosecution.
Derivatives should be outlawed, end of story.
#1.12 - Wed Jun 13, 2012 3:35 PM EDT
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