JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon appeared before the Senate Banking Committee today to discuss large losses the company suffered recently.
Throughout the questioning, Dimon came off as self-assured, asserting that JPMorgan would have survived the financial crisis if American International Group, Inc., commonly known as AIG, had not needed a bailout from the Federal Reserve in 2008.
“We did not borrow from the Federal Reserve except when they asked us to,” Dimon told Sen. Jeff Merkley (D-Ore.). He denied that JPMorgan was saved by the Troubled Asset Relief Program in the most contentious exchange of the day. Indeed, then-Treasury Secretary Henry Paulson asked all major U.S. banks to take bailout money in an effort to obscure which institutions were more at risk than others.
Dimon then got defensive, telling Merkley he would not engage in his line of questioning. Merkley interjected: “This is not your hearing. I’m asking you to respond to questions.”
Merkley then outlined what Democrats believe the Volcker Rule’s purpose is, that “banks are in the lending business, not in the hedge fund business,” and asked Dimon if he agreed.
The JPMorgan CEO responded that his bank is “not in the hedge fund business.” The JPMorgan website lists “Highbridge Capital Management” as a hedge fund under the umbrella of the bank.
In his opening statements, Senate Banking Committee Chairman Tim Johnson (D-S.D.) provided a defense of Wall Street reform.
“As for the policy implications, some of my colleagues complain that Wall Street Reform micromanages the operation of large banks and that regulators cannot keep up with bank innovation. I disagree that less supervision and less regulation will magically make the system less risky,” Johnson said. “While risk cannot be eliminated from our economy, we can, and must, demand that banks take risk management seriously and maintain strong controls. We must also demand that regulators do their job well.”
Protestors interrupted the beginning of the proceedings, yelling at Dimon about home foreclosures, in what appeared to be one of the most uncomfortable moments of the morning for the bank chief.
Later in the hearing, Sen. Jon Tester (D-Mont.) asked Dimon about some of JPMorgan’s stumbles in the home loan sector to which the CEO responded, “I have to confess we were not very good at it when we first started. We were overwhelmed.”
The hearing ended with Sen. Michael Bennet (D-Colo.) asking Dimon for fiscal policy advice for the U.S. government. Dimon endorsed the bipartisan plan put forward by the president’s deficit commission, known as Bowles-Simpson, and warned that if Congress did not act before the elections to extend tax breaks, raise the debt limit and undo $1.2 trillion in automatic spending cuts, financial markets would likely begin to react negatively and cause a further slowdown of the economy.
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.