Senator: JPMorgan strategy like a 'runaway train'

Ina Drew, JPMorgan Chase's former chief investment officer, is on Capitol Hill Friday to make her first public comments about the London Whale losses.

Current and former JPMorgan Chase executives, including ex-chief investment officer Ina Drew, are in Washington to testify about the bank's $6 billion London Whale losses before the Senate's Permanent Subcommittee on Investigations, led by Democrat Carl Levin and Republican John McCain.

Drew's testimony marks her first public comments on the bungled trades.  Ex-head of market risk in JPMorgan's chief invesment office Peter Wieland and acting risk offer Ashely Bacon also testified.

Levin and McCain, who led a nine-month investigation into the trades, said JPMorgan (JPM) manipulated results to mask the depth of the losses, actively shielding them from both regulators and investors in a scathing report released Thursday.

Levin kicked of the hearing, calling the trading loss a "disaster" and likening JPMorgan's trading strategy to "a "runaway train."

Carl Levin on $JPM: A runaway train of derivatives trading blowing through risk limits... hidden losses and regulators who failed to act."—
Aaron Lucchetti (@AaronLucchetti) March 15, 2013

Senator Levin : Destroying $JPM risk management process. $JPM works like a WALL St. CHOP SHOP. No wonder the financial crisis occurred!—
(@MarketWeight) March 15, 2013

Sen. Carl Levin: Apparently, JPMorgan was too busy betting on derivatives to make loans that would have sped the U.S. recovery.—
Stephen Gandel (@stephengandel) March 15, 2013

Throughout Levin's comments, Drew appeared to be less than pleased.

Ina Drew looks just thrilled to be there #JPMfailwhale—
David Dayen (@ddayen) March 15, 2013

McCain also railed on the bank during his opening statement.

McCain: JPMorgan "entertained and embraced idea that it was TBTF, developed a business model based on that notion" #whalefail—
David Dayen (@ddayen) March 15, 2013

McCain asks if JPMorgan believes taxpayers will bail them out "again." That should steam Dimon, who's adamant JPM wasn't bailed out.—
Pete Schroeder (@peteschroeder) March 15, 2013

Drew was the first among the panelists to speak. After she was sworn in, Drew began by talking about her career. Speaking softly, she said she was "proud of the amount of success we had protecting the bank." While she called her decision to resign last May "devastating," Drew also took "responsibility" for the mistakes that happened on her watch.

Related: Former London Whale boss: I was misled

But she added that her ability to limit risks and losses was undermined. She said that while her oversight was "reasonable and diligent," she has since learned "that valuations for many of the book's positions were inflated and not calculated or reported in good faith."

#JPMorgan's Ina Drew seems almost tearful, passing buck to "the London team". #business—
dominic rushe (@dominicru) March 15, 2013

Drew: members of the
team failed to value positions properly, minimized losses, and hid important information regarding risks $JPM—
Steve Schaefer (@SchaeferStreet) March 15, 2013

Ina Drew sees bus, throws many in front of wheels—
Jeff Cox (@JeffCoxCNBCcom) March 15, 2013

As senators pressed the panelists about the losses and their communication with bang regulators at the Office the Comptroller of the Currency (OCC), criticism and jokes were plentiful in the Twittersphere:

Anyone else see the resemblance between Ina Drew & Cruella de Vil? $JPM—
(@DerivTrader1) March 15, 2013

Senators too busy to show up for the $JPM CIO hearing. Wouldn't want to bite the $JPM hand that feeds them.—
(@MarketWeight) March 15, 2013

On $JPM: Clear risk mgmt meltdown. Lost $6B. People got fired. Yet no public money risked & earnings positive. So prefer DC now address jobs—
Adam Johnson (@AJInsight) March 15, 2013

Ina Drew: "I wasn't aware we were 1000% over the limit" Ridiculous, she was paid 30MM a year to know everything to do with her business.—
Eric Lam (@elam101) March 15, 2013

Clearly, Ina Drew was really on top of things. #whalefail—
Culture of Truth (@Bobblespeak) March 15, 2013

Following a short break, former CFO Doug Braunstein and Michael Cavanaugh, the JPMorgan exuecutive who led the internal investigation of the London Whale Losses, joined the witness panel.

During his questioning, Levin asked the panelists about the the daily profit and loss statements provided to the OCC as the bank's losses were adding up. He noted that a report dated mid-April to regulators showed that the trading losses were about $580 million, while an internal report revealed a $1.2 billion loss.

Drew said "to the best of my knowledge, the OCC was given daily reports of the CIO's mark-to-market activities." Levin was clearly dumbfounded by her response, repeating "to the best of her knowledge."

Braunstein and Cavanaugh said its was JPMorgan CEO Jamie Dimon's decision to temporarily withhold the data. Dimon testified before the Senate last June, and was not at Friday's hearing.

Braunstein says Dimon ordered that no data was to go to OCC. JPMorgan coverup?—
Ed Walker (@MasaccioFDL) March 15, 2013

$JPM's Cavenaugh admits that Jamie Dimon responsible for cutting off data to #OCC. "I don't recollect the specifics." #Whale @SenateBanking—
Pierce Gibson Crosby (@CrosbyVenture) March 15, 2013

"I don't recall the specifics." "How about the generalities?" What a hearing. $JPM—
John Navin (@JPNavin) March 15, 2013

Braunstein added that he does "regret" his role, and admitted that his pay in 2012 was almost cut in half.

Braunstein took a 47 percent pay cut to $5 million for 2012 pay because of whale screw up he tells Sen. McCain.—
@mdecambre (@mdecambre) March 15, 2013

Levin also asked about how traders disguised the depth of the losses. After some poking and prodding, Levin got Cavanaugh to admit that trades were marked differently to reduce the amount of losses, and then made the last word on the matter:

Levin: "I think we can agree that shifting accounting practices to minimize losses is not acceptable" $JPM #jpmwhale—
Emily Chasan (@echasan) March 15, 2013

Levin continued to grill the witnesses, and thanked them for coming without a subpoena.

This is Levin water torture for $JPM. Methodical. I'm convinced the man is wearing a catheter. And have I mentioned the chill in here?—
@mdecambre (@mdecambre) March 15, 2013

The most Watergate-like hearing I've seen in at least 30 years. Wow. $JPM—
John Navin (@JPNavin) March 15, 2013