JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he was “dead wrong” in initially dismissing news reports scrutinizing trades that led to a $2 billion loss and that it gives ammunition to proponents of tighter regulations.
“This is a very unfortunate and inopportune time to have this kind of mistake,” Dimon said in an interview broadcast today on NBC’s “Meet the Press.” After news broke on the magnitude of the bank’s bets, “we got very defensive, and people started justifying everything we did,” he said.
Dimon announced the loss May 10, almost four weeks after referring to articles about the trades as “a complete tempest in a teapot.” Positions taken by the firm’s chief investment office on synthetic credit securities remain volatile and may cost an additional $1 billion this quarter or next, Dimon told analysts last week.
JPMorgan was “sloppy” and “stupid,” Dimon told “Meet the Press.” He said he didn’t know if his firm broke any laws or U.S. Securities and Exchange Commission rules. “You always make mistakes,” he said.
The loss, which fueled a 9 percent loss in JPMorgan shares on May 11, will embolden those who want greater oversight, said Senator Carl Levin, a Michigan Democrat who is chairman of the Permanent Subcommittee on Investigations and co-author of the so-called Volcker rule. The cost to JPMorgan, in addition to the financial loss, now will include the lender’s inability to roll back regulations, Levin said.
“The real problem here is the battle is not just between Washington and Wall Street,” Levin said on “Meet the Press” today. “The battle is inside of Washington.”
Dimon has been a critic of Dodd-Frank provisions including the Volcker rule, which is meant to restrict proprietary trading by banks with federally insured deposits.
Elizabeth Warren, a Massachusetts candidate for U.S. Senate, called on Dimon to step down as a director at the Federal Reserve Bank of New York.
“He advises the Federal Reserve on the oversight of the financial industry,” Warren said yesterday in an e-mailed statement. “Dimon should resign from his post at the New York Fed to send a signal to the American people that Wall Street bankers get it, and to show that they understand the need for responsibility and accountability.”
Fed officials are gathering more information about the trading position, which they have known about for several weeks, according to a person familiar with the matter.
Representative Barney Frank, the Massachusetts Democrat who co-wrote the regulatory overhaul, criticized Republicans for cutting funding for financial regulation. With parts of the Volcker rule still being formed, Frank said he hopes derivatives rules won’t be slowed.
“We are very much still in the process of trying to decide whether or not we will have the rules in place,” Frank said on ABC’s “This Week” program. Lawmakers have tried to stop banks “from losing money in ways that would cause damage to the rest of the system.”
The SEC is looking into JPMorgan’s disclosures related to the trades, according to a person familiar with the situation.
“Of course regulators should look at something like this,” Dimon told “Meet the Press.” “It’s their job.”
The firm will still “earn a lot of money this quarter,” he said.
Dimon described himself as “barely a Democrat,” and said he was frustrated with “anti-business behavior” coming from the party.
Without regulations, Wall Street will lead the U.S. economy “off a cliff,” AFL-CIO President Richard Trumka said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.
“It says that financial regulation is more needed now than it ever was,” Trumka said. “The lack of Wall Street regulation is what got us to the mess that we came to, and almost totally disrupted our economy.”