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.
Today, JPMorgan shareholders will confront the company CEO Jamie Dimon about that $2.3 billion it lost in a complex, very risky bet. But shareholders will be voting on Dimon's $23 million pay package along with a proposal for an independent head of the board that could displace Dimon.
All of that is happening this morning as Senate Banking Committee says it will be investigating the trade. A lot of questions here and now, the stunning loss by America's largest bank is really a reminder of the 2008 financial crisis. It's also shifting the spotlight on those new banking rules that were supposed to prevent this kind of thing from happening again.
This morning on "Starting Point," Banking Committee memeber Senator Bob Corker (R-TN) explains why he's called for a hearing into the JPMorgan Chase loss, and explains why the Volcker rule may not have prevented these types of risky investments.
Lawmakers are about to get their chance to investigate JPMorgan Chase's deepening trading losses, which now some believe could potentially top that $2 billion number we've reported. This comes as CEO Jamie Dimon prepares to go before the bank's shareholders at the company's meeting today. Among other things they'll be voting on is Dimon's $23 million pay package.
This morning on "Starting Point," Banking Committee member Senator Jeff Merkley (D-OR) weighs in on what the JPMorgan Chase loss means for the banking industry. As a co-author of the Volcker Rule, which is part of a big set of Wall Street reforms passed in 2010, says if it had been implemented by now the rule would have prevented the type of investing that led to JPMorgan's losses.
“This is the type of investing, proprietary trading if you will, hedge fund style investing that specifically the Volcker Rule was designed to prevent," Sen. Merkley says. "If you want to be in the hedge fund business, great, sever your ties with insured deposits and take the big risks and the only people who get burned are your investors or your own funds but don’t do it and try to be inside the banking system, where we subsidize operations and provide loans, liquidity to families and businesses.”
Sen. Merkley also says that the type of investing JPMorgan Chase is engaged in is 'truly high-risk gambling.'
NEW YORK (CNNMoney) - JPMorgan Chase announced Monday that Ina Drew, the firm's chief investment officer, has left the bank after revelations of a $2 billion loss sustained over the past six weeks.
A statement issued by the company said Drew made the decision to retire, a move that was widely expected after the company disclosed the unit she managed had suffered a major loss.
Sheila Bair, senior adviser at the Pew Charitable Trusts and former chair of the FDIC has called for closing some of those loopholes that allowed this type of risky investments to happen. She also says banks like JPMorgan Chase are too large to manage and need smaller and simpler institutions.
"This is still a very serious issue," Bair says. "I think it does underscore that even with very good management these institutions are just too big to manage, and especially when dealing with very complex derivatives instruments trying to hedge risk in large securities trading books, even the best of managers can stumble. And so it does I think require, suggests smaller, simpler institutions, ones that have more focused management on particular bus iness lines."
A big shake-up and calls for Congressional hearings this morning after JPMorgan Chase reports a stunning $2 billion loss. It happened late last week when the financial giant revealed it had made risky credit bets in the European market. There are three executives are expected to resign – and Bloomberg is reporting JPMorgan's entire chief investment office in London could be let go.
The trades are raising some very serious questions about whether the country's biggest bank learned anything from the financial crisis four years ago. And what happened to the laws that were supposed to stop this?
Many of the rules created by the Dodd-Frank bill still aren't in place, two years later. JPMorgan Chase CEO Jamie Dimon, acknowledging this new mess could give regulators and members of Congress more reason to tighten any loopholes. Dimon also sits on the board of the New York fed, which regulates banks.
Elizabeth Warren, Democratic candidate for U.S. Senate in Massachusetts and consumer advocate, says Dimon should step down from the NY Fed board.
"Banks have been loading up on risk and they don't want to be accountable," Warren says. "Jamie Dimon not only is CEO of JPMorgan Chase, he holds this position of public trust, advising the New York Fed. on how to regulate risk for these large financial institutions, like his own finanicial institution."
She adds, "It's not just conflict of interest, it's a real point about attitude here. This isn't personal to Jamie Dimon. It's what's been going on ever since Dodd-Frank passed. There's been a guerrilla war out there in which the largest financial institutions have been doing everything they can to make sure that financial regulations don't get put in place. And if they do get put in place, that they're loaded with loopholes and not very effective. There's been a lobbying army hired by these financial institutions becasue they really don't want to have any oversight."
She also says why she prefers to go back to 'boring banking' rules for banks so a customer's personal funds aren't used in risky transactions.
Consumer advocate & Senate candidate Elizabeth Warren says banks should separate personal money from Wall Street trading.
Consumer advocate & Senate candidate Elizabeth Warren says there's too much risk in bank system and what needs to change.