Tim Johnson, the chairman of the Senate Banking Committee, opened the hearing into the $2 billion trading loss that JPMorgan recently incurred. In his address, Johnson said “it was an out-of-control trading strategy with little to no risk controls that cost the company billions of dollars. …. we can, and must, demand that banks take risk management seriously and maintain strong controls. …. I expect Mr. Dimon to be able to answer tough, but fair questions today. A full accounting of these events will help this Committee better understand the policy implications for a safer and stronger financial system going forward.”
Johnson made the objectives almost impossible to achieve from the outset, limiting each senator to 5 minutes. It was clear from the questioning that no strategy had been agreed between the Senators, and so a number of them were left with unanswered questions.
In Dimon’s prepared testimony, he ascribed the losses to a change of strategy, that instead of reducing risk, increased it.
It was a reporter for CNBC, not one of the Senators, that questioned Dimon on the email that he’d been copied notifying him of the change. “I paid virtually no attention to it. I didn’t think it was significant,” he said. The portfolio is worth $350 billion.
If that’s not significant, what is?
Dimon, at least, is open about his mistakes.
Dimon says that clawback provisions will be applied to recover some of the losses from responsible officers.
It’s a pity that the Senator’s salaries don’t have similar provisions.
JOHNSON STATEMENT ON JPMORGAN HEARING
Testimony of Jamie Dimon Chairman & CEO, JPMorgan Chase & Co. Before the U.S. Senate Committee on Banking, Housing and Urban Affairs Washington, D.C. June 13, 2012
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