June 19 (Bloomberg) -- Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said the European debt crisis is a larger threat to his bank than the loss of more than $2 billion from bets on credit derivatives.
“I am far more worried about Europe than I am about this trading position,” Dimon, 56, said today at a hearing of the House Financial Services Committee in Washington. “I hope the legislators over there can overcome their complications, and keep the euro zone alive.”
The euro declined yesterday as Spanish 10-year bond yields leapt above the 7 percent level that forced Greece, Ireland and Portugal to call for outside aid. Europeans leaders from the Group of 20 will commit to protecting the currency union and improving financial stability, according to an excerpt of a draft of a statement the leaders will issue at the end of a G-20 summit.
“They’re trying to put firewalls in place” to contain the crisis, Dimon said. “That might work. It’s important they do that and hold back a crisis and then they have to go about having a real fiscal treaty among the 17 nations of the euro.”
Dimon has sought to assure lawmakers that New York-based JPMorgan, the largest U.S. bank, can withstand losses from the trading blunder while fending off calls for increased regulation. Today’s hearing was called in response to Dimon’s May 10 announcement of the loss, after he’d said on April 13 that news reports on the trades were a “tempest in a teapot.”
“I’m sorry I take up so many people’s time on this loss, because it is rather not significant in the global scheme of things,” Dimon said.
The CEO also addressed Italy’s finances.
Italians have “the wherewithal to meet their debt, but they’re having a crisis of confidence, which is damaging them,” Dimon said. “The banks there own a lot of the sovereign debt. Banking systems don’t function very well if the sovereign system is not functioning.”
Italy’s 10-year government bond yield fell 17 basis points to 5.92 percent today.
Europe is making an effort to “break the feedback loop” between banks and government debt, the U.S. Treasury Department’s top international negotiator, Lael Brainard, has told reporters.
To contact the editor responsible for this story: Dan Kraut at email@example.com