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JPMorgan's Dimon outshines Senators

Wednesday, June 13, 2012 - 02:18

June 13 - JPMorgan Chase CEO Jamie Dimon held his own at the Senate Banking Committee hearing- apologizing for missing his bank's $2 billion trade, but saying “big dumb banks” should be allowed to fail. Bobbi Rebell reports.

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SOUNDBITE: PROTESTOR AT SENATE BANKING COMMITTEE HEARING (ENGLISH) SAYING: "You can get along without $2 billion and you can't give her a modification Dimon!" Protestors greeted JPMorgan Chase CEO Jamie Dimon when he sat down in front of the Senate Banking Committee. He was grilled about the at least $2 billion trading loss at his bank- including this exchange with Senator Robert Menendez: SOUNDBITE: SENATOR ROBERT MENENDEZ (D) NEW JERSEY (ENGLISH) SAYING: "When you reduce a hedge or hedge a hedge isn't that really gambling? SOUNDBITE: JAMIE DIMON, CEO, JPMORGAN CHASE (ENGLISH) SAYING: "I don't believe so, no." SOUNDBITE: SENATOR ROBERT MENENDEZ (D) NEW JERSEY (ENGLISH) SAYING: "So this transaction that you said morphed, what did it morph into: Russian roulette?" SOUNDBITE: JAMIE DIMON, CEO, JPMORGAN CHASE (ENGLISH) SAYING: "It morphed into something I can't justify. It was just too risky for our company." Dimon made it clear that more regulation would not have prevented that type of trading loss- saying that the regulations have become too complex. And in taking ownership of that mistake, he also said there should be no such thing as too big to fail. Banks should suffer the consequences of their decisions- and that the tax payers should not be on the hook for banks' mistakes. SOUNDBITE: JAMIE DIMON, CEO, JPMORGAN CHASE (ENGLISH) SAYING: "You want to be in a position where a big bank can be allowed to fail I wouldn't call it resolution. I think it's the wrong name. I think we should call it bankruptcy and personally I would call it bankruptcy for big dumb banks. When you have bankruptcy I'd have clawbacks, I'd fire the management, I'd fire the board. I'd wipe out the equity and the unsecured should only recover what they'd recover in a normal bankruptcy." During the testimony, shares of JPMorgan were on the rise in a down market, as investors took note of the hearing. But there were questions, including some about the Chief Investment Office, that were left unanswered according to Cornell Law Professor Charles Whitehead. SOUNDBITE: CHARLES WHITEHEAD, PROFESSOR, CORNELL LAW SCHOOL (ENGLISH) SAYING: "Why was the CIO given a pass? Why did they not have the same rigorous risk management oversight that other divisions had? And that didn't come out. We also didn't learn the details of the positions themselves and that's because they are trying to unwind them. They are trying to sell them down and Jamie Dimon, uncomfortable, not understandably, giving out any sort of information that could be used against the bank. " The bank said it will give shareholders an update on those losses when it reports earnings in July. Bobbi Rebell, Reuters