JPMorgan's CEO Calls Losses 'Indefensible'
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Jamie Dimon was on Capitol Hill yesterday. The chief executive of JPMorgan Chase was trying to explain his company's recent, multibillion-dollar trading losses. Dimon told the Senate Banking Committee that the losses were indefensible. He also said the company might try to recover some of the compensation it paid to the executives who implemented the failed trading strategy.
NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Dimon told the committee that the trades were conducted by the company's chief investment office, starting late last year. They were supposed to protect the company from risk, he said, but people conducting the trades didn't really understand what they were doing - and neither did senior managers.
JAMIE DIMON: I think I've been clear - which is, the original intent, I think, was good. What this morphed into, I'm not going to try to defend. Under any name, whatever you call it, I will not defend it. It violated common sense, in my opinion.
ZARROLI: Dimon told the committee the losses would cost shareholders money, which he was sorry about. "I'm absolutely responsible," he said. "The buck stops with me." But as bad as they were, he said, the losses would not hurt customers or taxpayers, and he called what happened an isolated incident. JPMorgan, on the whole, remains profitable, he said.
The senators were mostly respectful to Dimon - who is sometimes called Washington's favorite banker - but there were exceptions. Democratic Sen. Robert Menendez, of New Jersey, said Dimon had fought parts of the Dodd-Frank financial-overhaul bill. He also noted hedging strategies - such as the one pursued by JP Morgan - were supposed to reduce risk, not increase it.
SEN. ROBERT MENENDEZ: If it's too risky for your company, what stops it from being, in the future, too risky where you lose not 2 to 4 billion, but 50 billion?
ZARROLI: Menendez said such losses would ultimately be borne by U.S. taxpayers. The exchange grew testy at times. Dimon said he did have problems with some parts of Dodd-Frank, but wasn't opposed to all financial regulation. In fact, he said, he wished regulators had been able to stop the losses at JPMorgan Chase. But he said it would have been hard for any regulators to know what was happening unless senior managers alerted them to it. And managers didn't really understand it, either.
And he warned Washington officials not to overreact to what happened. We have the widest, deepest and best capital markets in the world, he said, and it would be a shame to shed that out of anger. Dimon also said JPMorgan's board has the authority to claw back money it paid to at least some of the traders and executives who caused the losses.
DIMON: You could expect we will take proper corrective action. And I would say it's likely - though this is subject to board - but it's likely there will be claw-backs.
ZARROLI: JPMorgan has already fired some of the people involved with the trades, including the head of the chief investment office.
Jim Zarroli, NPR News.
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