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Dimon Blames JP Mogran Losses On Top Executives In Senate Testimony
2012-06-14 03:36:27 (224 weeks ago)
Posted By: Intellpuke
JP Morgan boss Jamie Dimon blamed the bank's $2 billion-plus trading losses on "poorly conceived" strategies of senior executives who failed to keep him informed, as he escaped largely unscathed Wednesday from a Senate banking committee hearing set up to investigate the affair.

While Dimon told the committee that while he was ultimately responsible for the fiasco, he said he was not made fully aware of a strategy in London that was "poorly conceived and vetted" and that "violates common sense".

Dimon told senators that the bank was now looking to "claw back" compensation from those responsible. He refused to be drawn on details of who might be asked to return any money; Ina Drew, who headed the chief investment office where the losses occurred, earned close to $15 million last year. Shareholders recently approved a $23 million pay package for Dimon.

Senators at the hearing largely failed to land a blow on Dimon, although Democrats were critical of his attacks on financial regulation. The banker has been a major critic of some of the new rules brought in after the credit crisis, and he used the hearing to once more attack legislation aimed at curbing risky investments as banks considered "too big to fail".

When reports first emerged of problems at the bank's London office, now the subject of investigation by the FBI and financial regulators on both sides of the Atlantic, Dimon described them as a "tempest in a teapot". Dimon told the committee that before he made the comments he was assured by Drew, who oversaw the controversial trades, that losses were isolated and being taken care of. "I didn't know," Dimon told CNBC in an interview after the hearing. "I'd be crazy to get out there and say something I knew to be a lie."

(story continues below)

During the hearing Robert Menendez, a Democratic senator for New Jersey, said the bank had been "lobbying extensively" against regulations that would protect the bank against losses," Sherrod Brown, a Democratic senator for Ohio asked Dimon if "too-big-to-fail banks are too big to manage and too big to regulate".

Dimon told the committee: "The American business machine is the best in the world. We are blessed to have it." He warned that if the wrong financial regulation was imposed the U.S. would be "throwing the baby out with the bathwater."

The bank boss was particularly critical of the Volcker rule, legislation now being drawn up by regulators that seeks to limit the types of hedging allowed at the biggest U.S. banks. His critics have argued the rule could have prevented losses like those seen in London. "I think it is unnecessary. I wouldn't have tried to write the rule as it is currently constructed," said Dimon.

Dimon was noticeably rattled by questions from Jeff Merkley, Democratic senator for Oregon. Dimon said he believed that "big dumb banks" should be subject to "a bit of Old Testament punishment" if they fail. Merkley said JP Morgan would have faced a similar punishment after the 2008 credit crunch and Dimon would would have lost his job if the government hadn't used the Tarp bail out to save the bank.

Visibly irritated, Dimon said the bank didn't need Tarp funds and only took them because the government wanted it to. Merkley said many analysts disagreed. "They are factually wrong," said Dimon, launching into a defense before Merkley said: "Sir, this is not your hearing, I am asking you to respond to questions."

Intellpuke: You can read this article by Guardian U.S. Business correspondent Dominic Rushe, reporting from New York City, N.Y., in context here:

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