There were heated words on Capitol Hill yesterday as JPMorgan Chase CEO Jamie Dimon was grilled by members of the House. Dimon again was apologizing for his bank's multibillion dollar trading loss. He said it was embarrassing. Unlike his testimony before the Senate, yesterday's House Financial Services Committee hearing was far more contentious.
This morning on "Starting Point," Rep. Barney Frank (D-Mass.) explains why he was disappointed with Dimon's testimony.
See more from the interview in the clip below. Transcript available after the jump.
O'BRIEN: You said you were disappointed in Jamie Dimon's testimony. What exactly were you disappointed in?
FRANK: His failure to recognize that we need to change public policy, particularly, with regard to derivatives. He acknowledged that the bank made a mistake, a pretty big mistake that will cost $3 billion or more.
But, he then said, but change nothing. In fact, he told us that he continues to support a bill, which I believe we're going to be able to bock that the Republicans have been pushing that would exempt the kind of transactions - exactly the kind of transactions that cost the money from any regulation over derivatives.
And what he said is, my bank is very safe and we have a lot of capital. And we answered, we can't legislate just for his bank. There are other banks that are less well done. There are other institutions that aren't banks that don't have the same kind of rules.
So, I was disappointed that he wants us to treat this as just kind of like somebody tripped on the curb and do nothing to make it less likely that there could be problems in the future.
O'BRIEN: He was questioned a lot about lobbying against Dodd- Frank. Let's listen to that.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Are you for Dodd-Frank?
DIMON: That's a hard one to say.
We had a major crisis, and we never denied that. The crisis unveiled lots of flaws in our system, not one flaw, lots of flaws. So, we understood the need for reform. There are parts of Dodd-Frank we supported. There are parts of Dodd-Frank we didn't.
(END VIDEO CLIP)
O'BRIEN: He went on to say that, hey, it's well within my rights to - our rights to lobby against Dodd-Frank. Isn't that true? Doesn't he have a point?
FRANK: Well, of course, it is. I never questioned that. No one questioned it. Actually, Ms. Waters said about lobbying, and he said, I have a right to lobby. And she said quite eloquently, no one is questioning your right to lobby. We're arguing about what we think is in the best interest of the American public. That's a storm in [INAUDIBLE].
I've never heard anybody in any way interfere with his right to lobby or hire people to lobby. What we want to get to is the substance. And the substance is this. Much of what the bill does regulates derivatives in ways that hadn't ever been done as derivatives were developed. And derivatives were a major part of the crisis.
AIG in London was exactly the kind of issue that caused the problem that his bill that he supports would exempt from regulation. And that's the debate. Should we go forward with regulation of derivatives or should we not? That's a legitimate debate. And by the way, he says he supports some and not others.
I'm not surprised that the financial institutions whose behavior collectively, I believe, caused this problem and who will be somewhat restricted in their ability to do things that they think are good because they make money, but we think cause too much risk, we didn't do this for them. We did it for the economy.
O'BRIEN: He says, JPMorgan, too big to fail. Let me play - or not too big to fail is really what he said in his testimony.
O'BRIEN: Let me play a little piece and ask you a question on the other side of it.
(BEGIN VIDEO CLIP)
DIMON: With JPMorgan's size and capability and diversification in 2008, 2009, and 2010, allowed us to continue to do the things that you want us to do. We never stopped making loans. We bought Bear Stearns at the request of the United States government. We helped the FDIC fund by buying WaMu.
(END VIDEO CLIP)
O'BRIEN: So, basically, he's saying, they're big, but they're not too big to fail. But at the same time, they're big so they can be helpful and stable. Did you see contradiction in that?
FRANK: No, I don't. He's the story. First of all, he's right. He did respond with regard to Bear Stearns and WaMu. Those were responsible actions, and the bank deserves credit for them. And they took on these things that could have been liabilities and managed them well.
As to too big to fail, the point he was making is the point, frankly, where he and I are in great agreement and where he agrees with the financial reform bill. What we are saying is that - and he said this explicitly, if a bank, any financial institution of great size got so indebted that it couldn't pay its debts, under our law, it is put out of business.
That's where the debt panels are. They don't put all the (INAUDIBLE) to debt. They put (INAUDIBLE) to debt. And, it also says that if that happens, nobody in the federal government can use any tax money to pay to get rid of it. They can advance the money, but every penny that's expended has to come back from an assessment on big banks.
And the other point is that if a bank can't pay its debts, it fails under our bill. They're fired. The shareholders are wiped out. So, on that one, he is correct. It may be that a particular institution is so big that when it fails - if it fails, it will cause some problems. We have in the law ways to deal with those problems or to guarantee that there's no cost to the taxpayer.
In 2008, when President Bush was president, Ben Bernanke used a law to give money to AIG and keep them in business. We repealed that law, so there was no longer any possibility of any federal official using federal tax dollars in any permanent way. It can be a temporary loan, but it's got to be immediately repaid by an assessment on the big banks. So, in that one, he's accurate.
O'BRIEN: Congressman Barney Frank joining us this morning. Nice to see you, sir. Thanks for your time. Appreciate it.
FRANK: Thank you.