A month after revealing a multi-billion trading loss, JPMorgan Chase CEO Jamie Dimon took the hot seat on Capitol Hill. Dimon, who was once dubbed President Obama's favorite banker, was grilled by both Democrats and Republicans on the Senate Banking Committee.
"The way it was contrived between January to March, it changed into something I cannot publicly defend," he said.
The outspoken Dimon continued to stress that the incident was "an isolated event" and that overall, JPMorgan (JPM) remains "solidly profitable" in its second quarter.
As regulators and lawmakers evaluate Dodd-Frank -- Wall Street's reform law passed in response to the financial crisis -- senators repeatedly asked Dimon about how to better regulate the banking system.
12:14 pm: Senate hearing concludes with Dimon stressing, and agreeing with the Senator Shelby, that "there is no substitute for capital."
The show will resume next week when Dimon returns to Capitol Hill to field questions from members of the House of Representatives. Hopefully someone will remember to ask Dimon how big the loss is now.
12:10 pm: Senator Michael Bennet asks for Dimon's advice on how Congress should handle the U.S. deficit and fiscal cliff:
"Don't wait until Dec. 31," warned Dimon. "Markets and businesses could take actions before then that could create a slowdown in the economy, which could be bad. It would be better to do something now. Don't create additional uncertainty among businesses and consumers. "
Dimon gave two thumbs up to the Simpson-Bowles deficit reduction plan.
11:55 am: Dimon on TARP:
11:45 am: Senator Herb Kohl asks why JPMorgan's loan to deposit ratio is much lower than its peer banks. Is it because JPMorgan is prioritizing risky trading over lending?
Dimon defends JPMorgan, calling it a "global money center bank " unlike any of its peers. Bank needs to have huge amounts in liquidity funds in case a company decides to move $5 or $10 billion in a one day.
"We're not like all other banks," said Dimon. "We need to have a lot of cash around."
11:35 am: How is JPMorgan's stock faring today? Up more than 2%.
11:25am: Senator Sherrod Brown grilled Dimon about the lack of oversight from the Office of the Comptroller of the Currency (OCC). Dimon said the second the OCC realized the significance of the bad trades, they questioned them every day.
11:12 am: Senator Jim DeMint brings the conversation back to Dodd-Frank. Dimon complains that financial institutions need stronger regulation, not more regulators. He says the system lawmakers have created is really complex, and it's hard to figure out which agencies and authorities are responsible.
11:05 am: Senator Bob Menendez "paraphrases" Shakespeare: "A hedge or not a hedge, that is the question.">
11:00 am: Senator Bob Corker pushes Dimon to answer whether Dodd-Frank has made financial institutions safer. Dimon tries to beat around the bush but ultimately concludes, "I don't know."
10:55 am: Dimon on the Volcker Rule, which would bar banks from so-called proprietary trading, or trades for their own profit-making purposes.
10:53 am: Former oversight official and current senate candidate Elizabeth Warren:
10: 44 am: Dimon says executives may have to give back some of their compensation due to the bad trades.
Senator Chuck Schumer approves, calling the clawback the plan the "appropriate thing to do."
10:35 am: Yikes! CNN cameras caught protesters getting arrested outside the hearing room. Even as police handcuffed them, protestors had plenty of words for Dimon.
10:30 am: Dimon's answer to the first series of questions: Whoopsies!
Answering why "no one was watching" the chief investment office more closely, Dimon says "a bit of complacency" and "maybe some overconfidence."
10:25: Dimon concludes his testimony by saying how proud he is of JPMorgan as a company and all its employees. Now Dimon begins fielding questions from lawmakers.
10:22 am: Dimon is mostly sticking to the script, but inserting a few comments for extra emphasis:
"CIO, particularly the synthetic credit portfolio, should have gotten more scrutiny from both senior management -- I include myself in that-- and the firmwide risk control function."
10:18 am: Dimon begins delivering his prepared testimony.
10:11 am: Senator Richard Shelby, the top Republican member of the committee, says in his opening statement that two key questions need to be answered:
10:06 am: Chairman Johnson makes his opening statement: "I expect Mr. Dimon to answer tough but fair questions today."
10:02 am: Dimon has yet to begin talking, and the scene is already rowdy.
Police are escorting protestors in the audience changing "Stop foreclosures now!" out of the hearing room. Senator Tim Johnson, who chairs the committee, has given a final warning to audience members.
9:58 am: Dimon has entered the hearing room.
|Fired Wells Fargo workers file federal class action lawsuit|
|Ford fact checks Trump: We will be here forever|
|Who won the debate? The Mexican peso says it wasn't Trump|
|The weekend America's newspapers called Donald Trump a liar|
|Donald Trump: 'Lester Holt did a great job'|