JPMorgan Chase chief Jamie Dimon acknowledges terrible,

JPMorgan Chase chief Jamie Dimon acknowledges ‘terrible, egregious mistake’



By Lisa Rein, Sunday, May 13, 3:29 PM

JPMorgan Chase chief executive Jamie Dimon acknowledged Sunday that the bank “made a terrible, egregious mistake” by dismissing concerns about a $2 billion trading loss it disclosed last week.

“We were dead wrong” to dismiss questions about reports that a trading group in London was taking outsize positions to hedge against risk and distorting the market, Dimon told NBC’s David Gregory in an interview that aired on “Meet the Press.” The bank’s actions were “sloppy and stupid,” he said.

In a conference call with analysts in April, Dimon called the concerns a “complete tempest in a teapot.”

“There’s almost no excuse for it,” he said Sunday about the trading loss, which resulted from risky bets on credit derivatives made by the bank’s chief investment office in London.

The losses, disclosed by the bank Thursday, have reopened a long-standing clash between Capitol Hill lawmakers and Wall Street over whether banks are still taking too much risk and whether they should be pushing back against regulations passed after the financial crisis.

Although Dimon is a big Democratic donor who has had a close relationship with President Obama, the banker said Sunday that a lack of collaboration between the parties has hurt the country’s business climate.

“It’s true to say we haven’t had true, common collaboration,” he said, answering a question on whether the Obama administration has created an anti-business environment. “To me, it’s not Democrat or Republican.”

But he said, “Democrats were so tough on Republicans that you’re seeing a little bit of that give back at this point.” He urged the parties to “put their knives down and get back to work for the American public.”

Dimon said JPMorgan is open to questions from regulators on the type of trading that led to the $2 billion loss and supports giving government the authority to dismantle a failing bank, even if shareholder equity would be wiped out. He promised to get to the bottom of the mistake and learn from it.

But he has argued against strict financial regulations. He said Sunday that JPMorgan is “very strong” and acknowledged that the losses would give regulators ammunition to tighten restrictions on banks.

“This is a very unfortunate and inopportune time” for the trading losses, Dimon said, conceding that the bank “hurt ourselves and our credibility” and expects to “pay the price for that.”

Senior Democrats repeated their call for stricter regulations.

Sen. Carl M. Levin (D-Mich.) said Sunday the JPMorgan loss only confirms that banks’ pushback against new rules passed after the financial crisis will backfire.

“This was not a risk-reducing activity that they engaged in. This increased their risk,” Levin said on “Meet the Press.”

“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 that caused the JPMorgan loss, he said.

Regulators are drafting new rules governing banks. A signature feature of the changes is the Volcker Rule, a prohibition on banks engaging in speculative bets that is intended to keep them from putting federally insured deposits at risk.

The authors of the act, who include Levin, say the measure might have prevented JPMorgan’s bad trades had it been in effect.

Wall Street firms have criticized the proposed rule as broad and ill-defined and say it will force them to shed businesses and increase risks for clients.

The rule prohibits banks from speculating with their own money — rather than on behalf of their clients — but firms argue that the dividing line can be hard to define.

Dimon has said the trading involved in the $2 billion loss would not have fallen under the rule.

Rep. Barney Frank (D-Mass.), who co-wrote a regulatory law that bears his name, said on ABC’s “This Week” that he hopes the final version of the Volcker Rule will prevent the type of trading that led to the JPMorgan losses.