Regulators faced senators demanding to know how JPMorgan was allowed to make trading bets that could end up costing it at least $2 billion. (June 7, 2012)
Tell us just walk us through. -- from what you know. What was going on at at JPMorgan you know where they managing risk. Where they are making money when they do -- -- what. Everybody's got to measure risk but we'll know what's what was really going don't you. It's a very complicated. Investment strategy both in terms of its size. As well as complexity. We are. Looking to determine what the actual strategy behind. That. Investment. Scheme. Was and also what if there aren't any other factors that we're. Driving that strategy other then attempting to mitigate. Unknown risks and the bank's portfolio. I know you just got this position. And I'm certainly not blaming you personally for this but I just have a yes or no question did the OCC. Screw up and allowing these JPMorgan traits to happen. Senator. We're we're going to the critically look at that. Question that's part of Mike call when reviewing what happened to touch it -- market which case. Is not just two of see what the bank itself did or did wrong. But also how we can improve our supervisor processes. At the OCC. -- will be you know I -- critical self review as part of this process. Does the FTSE -- the OCC have any. Regulatory oversight whatsoever over the winding process. Yes yeah that's a considerable focus and examining stuff supervision and lots of regulation right. Documentation and outside the concentration requirements. Supervision. Of the activities. And yet despite that. 100%. Of the failures of banks in America the last two years are attributed to. Bad loans this is not Mike I'm not criticizing the regulatory process the real goal of the regulatory regime it seems to -- Ought to be to just ensure that you don't have systemic risk you don't have the failure. One or more institutions. Taking down the arrest. Does anyone on this panel. Think that -- -- the London whale who ran JPMCC Europeans she can best unit. -- woke up each day trying to Medicaid the risk from excess deposits invested between loans in. In bonds. That is related -- of angry. -- -- So you're inquiring about it but it that you wouldn't argue that case. Not monotonous it's no I wouldn't think anyone would because he woke up each day as head of the strategic investing unit trying to make money for the bank. And so. It's. Kind of a basic observation. And and and if you would as you go through past -- there's in order to have a political response to what just happened during this political season. We could end that making -- regulations on hedging that make some of the highly complex organizations if we're gonna keep them like they are. Even more risky is that correct. It's America. The central issue here is hedging is as the risk management activity to reduce risk to the institution. As opposed to activity that would get into events speculative nature we really trying to generate income. And I think the whole goal with pieces and I think this is pinpoint estimate setting up for the creating a set of controls. Which you can monitor the activities so that. Legitimate and important hedging activity goes forward.