JPMorgan Chase Chief Executive
Jamie Dimon on Tuesday took heat again on Capitol Hill in less than
a week to explain how the firm lost billions of U.S. dollars on
Dimon's appearance before the House Financial Services Committee marked his second hearing in the past week. It also featured testimony from federal regulators, who had been investigating the risky trades that led to the loss.
Dimon announced on May 10 the loss and admitted the company used a new model, which later proved to be "inadequate" to calculate "value at risk" some time during the first quarter.
At the hearing the Securities and Exchange Commission Chairwoman Mary Schapiro told the panel "there could be" violations of disclosure or other rules that would lead to sanctions against JPMorgan.
"It may have aggravated what happened," Dimon argued. "I wouldn 't say it was the cause of what happened."
U.S. Comptroller of the Currency Thomas Curry, whose agency is another major regulator of JPMorgan, said "in hindsight, if the reporting were more robust or granular, we believe we may have had an inkling of the size, the potential complexity, the risk of the position." He also told the panel that the loss appeared to be caused by "serious risk management weaknesses or failures at the bank."
Dimon told the Senate Banking Committee last week that JPMorgan 's Chief Investment Office poorly conceived and vetted the hedging strategy and senior banking executives responsible for the loss would probably have their pay taken back by the company.
He also warned that the two billion dollars loss could balloon as the bank unraveled some of its questionable trades, but he won' t provide an update until the bank releases its second quarter earnings on July 13.
The loss also raised concerns that the biggest U.S. banks still posed risks to the financial system, less than four years after the financial crisis erupted.
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