JPMorgan CEO 'dead wrong' about $2 billion loss
JPMorgan's Dimon says he didn't know the extent of the trading losses when he called them a 'tempest in a teapot' in April. The loss came from trading to limit JPMorgan's risk, he says, not make a profit.
NEW YORK — The CEO of JPMorgan Chase, which disclosed a $2 billion loss last week, said he was "dead wrong" when he dismissed concerns about the bank's trading last month.
CEO Jamie Dimon said he did not know the extent of the problem when he said in April that the concerns were a "tempest in a teapot." After the bank reported the trading loss, investors shaved almost 10 percent off the bank's stock price.
The $2 billion loss came in the past six weeks. Dimon has said it came from trading in so-called credit derivatives and was designed to hedge against financial risk, not to make a profit for the bank.
Dimon said the bank is open to inquiries from regulators. He has also promised, in an email to the bank's employees and in a conference call with stock analysts, to get to the bottom of what happened and learn from the mistake.
Dimon told NBC that he supported giving the government the authority to dismantle a failing big bank and wipe out shareholder equity. But he stressed that JPMorgan, the largest bank in the United States, is "very strong."
Lawmakers and critics of the banking industry have seized on the $2 billion loss to say that banks still take too much risk more than three years after the financial crisis.
A piece of the 2010 financial reform regulation known as the Volcker rule would prevent banks from certain kinds of trading for their own profit. Dimon has said the trading involved in the $2 billion loss would not have fallen under the rule.
Democratic Rep. Barney Frank, who was one of the namesakes of the 2010 financial overhaul law, known as Dodd-Frank, told ABC's "This Week" that he hopes the final version of the Volcker rule will prevent the type of trading that led to the massive loss at JPMorgan.
Dimon conceded to NBC that the bank "hurt ourselves and our credibility" and expects to "pay the price for that." Asked what the price should be, Democratic Sen. Carl Levin said that banks will lose their fight to weaken the rule.
"This was not a risk-reducing activity that they engaged in. This increased their risk," Levin told NBC.
"So we've got to be very, very careful that the regulators here are not undermined by this huge effort to weaken the rule by putting in a huge loophole" that includes the trading involved in the JPMorgan loss, he said.
Addressing public anger toward Wall Street, Dimon said he wants a more equitable society and does not mind paying higher taxes. But he said attacking all of business is "very counterproductive."