- Article by: BEN PROTESS and MICHAEL J. de la MERCED New York Times
- Updated: June 13, 2012 - 9:00 PM
The JPMorgan CEO offered an apology but also defended his business.
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WASHINGTON - Jamie Dimon, the outspoken chief executive of JPMorgan Chase & Co. under scrutiny for a multibillion-dollar trading loss at his firm, apologized for the mishap Wednesday even as he mounted a fierce defense of his bank.
Testifying at a much-anticipated hearing before the Senate BankingCommittee, Dimon said that he was "proud" of the bank, highlighting the firm's "fortress" balance sheet and its performance during the financial crisis.
"We're doing what a bank is supposed to do," he told a panel of lawmakers, few of whom posed combative questions during the roughly two-hour hearing.
The hearing Wednesday was the latest chapter of the trading debacle, which has stained the bank's reputation and prompted wide-ranging inquiries from regulators and the Federal Bureau of Investigation. The concerns have centered on the bank's chiefinvestment office, which placed a big bet tied to credit derivatives that ultimately soured.
Despite the controversy plaguing the bank, Dimon on Wednesday seemed to solidify his status as Washington's favorite banker. Clad in a dark suit and striped tie, he navigated the hearing with relative ease, deflecting tough questions and fielding softball inquiries.
He received a particularly warm welcome from Republican senators, who praised JPMorgan and allowed the chief executive to offer criticisms of forthcoming financial rules. Sen. David Vitter, R-La., asked Dimon about the Volcker Rule, an element of the Dodd-Frank regulatory overhaul meant to clamp down on banks' trading for their own account. Vitter asked if there was a version of the Volcker Rule that "makes sense." Dimon, who is not a big fan of the extensive regulation, responded, "I thought it was unnecessary when it was added on top of other stuff."
Some lawmakers used their five-minute question periods to compliment Dimon and ask his advice on fixing the economy, speaking to Dimon's still-considerable sway among lawmakers.
Dimon "has always been well regarded and had considerable clout," said Tom Block, a former head of government relations at JPMorgan.
On Wednesday, Dimon seemed to placate some lawmakers instantly with the disclosure that the bank would "likely" seek to recover compensation from executives responsible for the trading loss. Once the bank's board completes an investigation into what went wrong in the chief investment office, he said, the bank will decide whose paychecks to pursue.
"When the board finishes the review, you can expect we'll take proper corrective action," Dimon said.
He also disclosed for the first time that the positions, which have since caused at least $3 billion in losses, set off the bank's own internal risk alarms in March, weeks before Dimon publicly played down the threat on a conference call with analysts. The revelation raises new questions about Dimon's now-infamous statements on the April 13 conference call, when he said that concerns about the trades were a "complete tempest in a teapot."
"Why were you willing to be so definitive?" asked Sen. Tim Johnson, D-S.D., who leads the banking committee.
Dimon, striking a brief note of contrition, conceded, "It was dead wrong."
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