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Dimon faces tougher queries in House
JPMorgan CEO won’t put total on trading loss
The CEO of JPMorgan Chase & Co. had a much tougher reception Tuesday when he returned to Capitol Hill for a second round of questions about the bank’s $2 billion trading loss.
House lawmakers from both parties pressed Jamie Dimon on a number of fronts: Did JPMorgan manage risk properly? Why was the bank trading so much out of its London office? Has the bank become too large and complex to control?
The hearing before the Republican-led House Financial Services Committee was far more combative in tone than his appearance last week before the Senate Banking Committee.
For his part, Mr. Dimon again apologized for the trading loss and the damage it caused to shareholders. The company has lost about $23 billion in market value since the loss came to light May 10.
But Mr. Dimon stressed that taxpayers and customers of the bank were not affected by the loss. When pressed, he was firm and frank.
At one point, Rep. Sean P. Duffy, Wisconsin Republican, asked Mr. Dimon how high the losses could mount.
“Is it fair to say that JPMorgan could have losses of half a trillion, or a trillion dollars?” Mr. Duffy asked.
Mr. Dimon replied bluntly: “Not unless the Earth is hit by the moon.”
He avoided putting a number of the bank’s trading loss, which has raised concerns about the risks large banks pose to the U.S. financial system just four years after the financial crisis.
Mr. Dimon also bristled at a suggestion from Mr. Duffy that JPMorgan has become “too big to fail.” With $2.3 trillion in assets, taxpayers might be asked to step in to rescue the bank if its trades put the broader financial system at risk, Mr. Duffy said.
“No, we’re not too big to fail,” Mr. Dimon told the lawmaker in a heated exchange. “I don’t think there’s any chance we’re going to fail. But if we did, any losses the government would bear should go back, be charged to the banks.”
The Securities and Exchange Commission is examining whether JPMorgan’s April 13 earnings report gave adequate information on the risk model the bank was using. Earlier at the hearing, SEC Chairman Mary L. Schapiro told the panel “there could be” violations that would merit legal sanctions against the bank.
Democrats questioned Mr. Dimon about the bank’s trading operation in London, where the loss occurred.
Rep. Brad Sherman, California Democrat, asked why the bank devoted hundreds of billions of dollars to that operation when that money could go have gone to small-business loans in the U.S.
“We never stopped making loans,” Mr. Dimon insisted.
He also defended an exemption that allows looser oversight of the sort of derivatives trading overseas that the London operation engages in.
Customers “will go elsewhere if we can’t give them the best possible deal,” he said. “The main mission of this company is to serve clients around the world.”
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