WASHINGTON, May 14 (UPI) —
Banks will “lose their battle” to weaken new Wall Street rules, a U.S. senator said, as JPMorgan Chase & Co.’s head said its trading loss could top $3 billion.
Sen. Carl Levin, D-Mich. — a proponent of the so-called Volcker rule, limiting bank risk-taking, and other aspects of the Dodd-Frank Wall Street overhaul — was asked on NBC’s “Meet the Press” Sunday what price JPMorgan should pay for a massive trading bet that resulted in the huge losses.
Three days after saying JPMorgan’s losses would be about $2.3 billion, Chief Executive Officer Jamie Dimon told “Meet the Press” they could “be volatile by a billion dollars possibly,” meaning they could top $3 billion.
The Wall Street Journal reported Monday the firm was prepared for a total loss of more than $4 billion over the next year, though with a market rebound, the losses could be reduced.
Dimon told NBC Sunday he was “dead wrong” April 13 when he said concerns about reported problems with the London unit doing the highly risky trades were “a complete tempest in a teapot.”
The risky trades led to $14 billion off the bank’s stock-market value being wiped out Friday as U.S. and British regulators began investigations into the losses.
JPMorgan also began investigating whether London traders hid the extent of losses on credit derivatives positions, the Financial Times reported Monday.
Dimon faces shareholders at the bank’s annual meeting in Florida Tuesday.
JPMorgan Chase is the largest U.S. bank, holding more than $2.3 trillion in outstanding loans and other assets, and employs 240,000 people in 60 countries.
Levin said Friday the bank’s trading losses were a “textbook illustration” of why Wall Street needed tougher regulation.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted by Congress two years ago in response to the Great Recession and related financial crisis, brought the most significant changes to U.S. financial regulation since regulatory reform after the Great Depression of the 1930s.
Dimon has campaigned against the Volcker rule and other sections of the act to create “a huge loophole” letting JPMorgan skirt the regulations, Levin told NBC.
He added the bank was “sloppy” and “stupid” and acknowledged the timing of the loss would add fire to calls for more stringent regulation.
Dimon largely sidestepped blame for the loss, the biggest of his eight-year tenure at JPMorgan.
As a result of the bad investments, Ina Drew, head of the unit with the losses, is one of at least three people expected to leave, the Journal and other newspapers reported.
Others to depart are Bruno Michel Iksil, who headed the London trading team and was known as the “London Whale” for big positions he took in credit markets, and Javier Martin-Artajo, another member of the team, the Journal and the other newspapers said.
Drew, the bank’s chief investment officer and a close Dimon associate, has been a longtime star at the bank who made $15.5 million last year, a regulatory filing indicated, and was listed at No. 8 on Fortune magazine’s 2011 list of highest-paid businesswomen.