Senate Banking Committee members will have chances to question regulators about events leading to JPMorgan Chase & Co.’s $2 billion trading loss at hearings on Dodd-Frank Act rulemaking, the panel’s chairman said.
“Over the next few weeks, the Senate Banking Committee will continue its oversight of the implementation of Wall Street reform by holding additional hearings with key financial regulators,” Senator Tim Johnson, a South Dakota Democrat, said today in an e-mailed statement. The JPMorgan losses are “expected to be discussed at these hearings,” Johnson said.
The panel doesn’t have a hearing scheduled specifically about the bank’s losses or its chief investment office, which JPMorgan Chief Executive Officer Jamie Dimon said made “egregious mistakes” in overseeing the trades. There are no plans at this point to invite executives of the New York-based bank to testify, said Sean Oblack, Johnson’s spokesman.
“We need to hear from regulators, and also review relevant facts as they become available, before making a decision,” Oblack said in an e-mail.
Johnson announced that JPMorgan, the biggest U.S. bank, would be discussed at Senate hearings as lawmakers and regulators sift through reports stemming from Dimon’s May 10 disclosure of losses tied to flawed positions on “synthetic credit” trades. Johnson’s statement was a response to a request from Senator Bob Corker, a Tennessee Republican, to hold hearings on the bank’s losses “as expeditiously as possible.”
The Banking Committee will hear from representatives of the Federal Reserve, the Office of the Comptroller of the Currency and other agencies at hearings on implementation of Dodd-Frank, the regulatory law enacted in response to the 2008 credit crisis, and the stability of financial markets, Johnson said.
Congressional Democrats have seized on JPMorgan’s loss as an example of why new bank regulations, including the so-called Volcker rule, are needed. Regulators are in the final stages of rulemaking on the proprietary trading ban named for former Fed Chairman Paul Volcker.
The only reason the Senate Banking Committee wouldn’t hold a hearing on the JPMorgan trade is “that maybe it points to some flaw in the Volcker rule itself or flaw in Dodd-Frank,” Corker, a member of the panel, said today in a Bloomberg Television interview.
“I think any responsible chairman of any banking committee right now would want members of that committee to understand how something like this happens,” Corker said.