The CEO of JPMorgan Chase, which disclosed a $2 billion loss last week, said he was “dead wrong” when he dismissed concerns about the bank’s trading last month.
CEO Jamie Dimon said he did not know the extent of the problem when he said in April that the concerns were a “tempest in a teapot.” After the bank reported the trading loss, investors shaved almost 10 percent off the bank’s stock price.
“We made a terrible, egregious mistake,” Dimon said in an interview that aired Sunday on NBC’s “Meet the Press.” ”There’s almost no excuse for it.”
The $2 billion loss came in the past six weeks. Dimon has said it came from trading in so-called credit derivatives and was designed to hedge against financial risk, not to make a profit for the bank.
Dimon admitted that he “somewhat missed” the warning signals and noted that “the mistake had been brewing for a while.”
He said the firm took on far too much risk, and the strategy was “badly vetted and badly monitored.”
Although he noted the situation at JPMorgan could get worse before it gets better, he pointed out that the firm is looking into what happened and plans to fix it and get better.
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Dimon said the bank is open to inquiries from regulators and doesn’t yet know if any laws were broken.
Dimon told NBC that he supported giving the government the authority to dismantle a failing big bank and wipe out shareholder equity. But he stressed that JPMorgan, the largest bank in the United States, is “very strong.”
Lawmakers and critics of the banking industry have seized on the $2 billion loss to say that banks still take too much risk more than three years after the financial crisis.
A piece of the financial regulation known as the Volcker rule would prevent banks from certain kinds of trading for their own profit. Dimon has said the trading involved in the $2 billion loss would not have fallen under the rule.
Rep. Barney Frank, D-Mass., told ABC’s “This Week” that he hopes the final version of the Volcker rule will prevent the type of trading that led to the massive loss at JPMorgan.
Dimon conceded to NBC that the bank “hurt ourselves and our credibility” and expects to “pay the price for that.” Asked what the price should be, Sen. Carl Levin, D-Mich., said that banks will lose their fight to weaken the rule.
“This was not a risk-reducing activity that they engaged in. This increased their risk,” Levin told NBC.
“So we’ve got to be very, very careful that the regulators here are not undermined by this huge effort to weaken the rule by putting in a huge loophole” that includes the trading involved in the JPMorgan loss, he said.
Dimon also discussed the economy, jobs and the 2012 election in a wide-ranging interview, taped before the firm announced its massive loss, which you can watch below.
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Dimon insisted that the economic recovery is “too slow,” arguing that “we should do whatever we can to get jobs going.”
“We need jobs. Everyone wants jobs,” Dimon said. “People want to move out of their parents’ homes.”
While noting that he couldn’t back Obama or Romney because of his position on the NY Fed board, Dimon said he’s “barely a Democrat,” explaining that he’s “gotten disturbed at the Democrats’ anti-business behavior.”
He repeatedly urged Democrats and Republicans to collaborate to improve the country’s economy, saying he wishes both sides “would put their knives down and get back to business.”
Addressing public anger toward Wall Street, Dimon said he wants a more equitable society and does not mind paying higher taxes. But he said attacking all of business is “very counterproductive.”
Discussing TARP and other responses to the 2008 financial crisis, Dimon said the economy could have gotten far worse if government officials hadn’t acted the way they did and he “thanks them for [responding.]”
Additional reporting by Hilary Lewis