U.S. Treasury Secretary Timothy F. Geithner said JPMorgan Chase & Co. (JPM)’s $2 billion trading loss was “a pretty significant risk-management failure” that was manageable because of the bank’s level of capital.
The loss is “a good reminder of the inherent uncertainty you live with” in financial markets, Geithner said today during a talk at the Council on Foreign Relations in Washington. He said JPMorgan was “direct and clear and crisp in admitting the scale of the error.”
JPMorgan Chief Executive Officer Jamie Dimon testified before Congress today, spending much of a Senate Banking Committee hearing questioning the federal regulatory system.
Dimon described the trading loss as a hedge that “morphed into something I can’t justify,” and largely blamed subordinates for a trading strategy gone wrong. The bank is looking at clawing back some of the compensation earned by those responsible, he said.