JPMorgan Chase & Co. (JPM), the biggest U.S. lender, held $168 million in collateral for seven months before returning it to MF Global Inc. because the bank needed court guidance, Chief Executive Officer Jamie Dimon said.
Dimon, 56, appearing today before the Senate Banking Committee, was asked about the New York-based bank’s dealings with parent MF Global Holdings Ltd. (MFGLQ), the firm led by former New Jersey Governor Jon S. Corzine before it filed for bankruptcy on Oct. 31. The money represents proceeds of excess collateral that JPMorgan held at the start of the liquidation, MF Global Inc. trustee James Giddens said in a May 18 statement.
“The second they had problems, we immediately went to the trustees and the courts, told them exactly what we had and what we didn’t have, and have been waiting for them to finish their work before we released anything,” Dimon said, responding to questions from Senator Jon Tester, a Montana Democrat. “There was no hiding anything. We cooperated every step of the way.”
JPMorgan was the failed firm’s biggest lender and is involved in discussions with trustees over whether it may be holding money belonging to MF Global customers. Giddens has said he may sue JPMorgan, the repository of its customer accounts. Giddens said last week that he is in talks with the New York- based bank about money transfers that may be “voidable or otherwise recoverable.”
MF Global may have improperly used client money to cover other obligations, according to Giddens. Farmers who used MF Global for hedging purposes may lose money, Tester told Dimon.
“I hope they’re going to get all their money back,” Dimon said. “I still believe they will, by the way.”