The chairman of the nation's largest bank apologized to a Senate committee Wednesday for trading losses that so far have exceeded $2 billion, but he defended his company's overall investment practices and insisted there is no need for increased government regulation of the nation's banking industry.
Jamie Dimon, the CEO of JPMorgan Chase & Co., was greeted by protesters when he arrived on Capitol Hill on Wednesday for the first of two scheduled congressional hearings on the causes of the massive losses his company suffered in May.
One protester shouted that Dimon should be jailed as punishment for the losses.
Senators presiding over the hearing, however, were much more understanding, veering more toward admiration than admonishment of Dimon. And with good reason.
JPMorgan Chase & Co. gave more money in the 2011-2012 election cycle than any other commercial bank. Of its $1.7 million in contributions, more than half went to Republican candidates and causes, according to the Center for Responsive Politics.
Senators accepted Dimon's explanation that the debacle at JPMorgan stemmed from mistakes made at the bank's London branch, which placed a major investment portfolio into a complex and risky investment strategy that failed catastrophically.
"This portfolio morphed into something that rather than protect the firm, created new and potentially larger risks," Dimon told the senators. "As a result, we've let a lot people down and we are very sorry for it."
Dimon dismissed the need for outside scrutiny of the losses, saying the company replaced the top management in its investment office and took steps to reduce future risk. The FBI and the Commodity Futures Trading Commission are also looking into the losses, which hit shareholders rather than bank customers.
Republicans on the Senate panel were the least critical of Dimon, citing his success as the bank's CEO and the fact that the bank posted a $19 billion profit, despite the recent loss.
Republicans instead encouraged Dimon to talk about the downside of tighter federal regulation of the banking industry that many Democrats want to initiate through the so-called Volcker Rule, which would limit riskier investments by banks.
Sen. Bob Corker, R-Tenn., said JPMorgan's losses demonstrate that the Dodd-Frank Wall Street reforms passed by Democrats in 2010 did nothing to curb losses at the nation's largest banks, that the reforms simply don't work.
"There's really no way for a regulator to catch this type of activity," said Corker, who called Dimon "one of the best CEOs in the country for financial institutions" and characterized the bank's $2 billion loss as "a blip on the radar screen."
Democrats were tougher on Dimon, challenging his opposition to the financial reforms and the Volcker Rule limits on investments.
"What your bank has been lobbying extensively against, is the very types of protections that at the end of the day can guarantee that the American taxpayer doesn't become responsible," Sen. Robert Menendez, D-N.J., said, referring to the 2007 federal bailout of the nation's largest financial institutions.
Dimon will face questions from lawmakers again on June 19, when he appears before the House Financial Services Committee.