Some on the Senate banking committee demanded more.
“When those bets go bad, instead of taking responsibility for it, you blame it on the unit that you set up?” asked Sen. Jeff Merkley (D-Ore.). “Shouldn’t you take personal responsibility since they were following the game plan that you personally laid out?”
“We made a mistake. I am absolutely responsible,” Dimon said. “The buck stops with me.”
A Democrat once close to the White House — President Obama called him one of the “smartest bankers” just a few weeks ago — Dimon has become one of the harshest critics of the administration’s signature overhaul of financial regulation, known as Dodd-Frank.
But as JPMorgan’s big trading loss renewed political pressure for greater oversight of Wall Street, Dimon has silenced his usually fiery critique of Washington intervention. On Wednesday, Republicans pushed him to blast it again. The now-chastened Dimon was reluctant.
“Has Dodd-Frank more than marginally made our banking system safer?” asked Sen. Bob Corker (R-Tenn.).
Dimon noted he had supported some elements of the bill. Corker asked again. Dimon dodged.
A third time: “Has it made our system safer?”
“I don’t know,” Dimon said.
But Democrats were quick to remind Dimon that they had enacted the financial overhaul because banks had gotten themselves into a mess in 2008. Democrats are pushing for a tough interpretion of the Dodd-Frank law as regulators fill in the details.
A core and unresolved question is whether the “Volcker rule,” a provision, opposed by Dimon, that would ban banks from speculating with their own money, would have prevented the activity at JPMorgan.
After Dimon told lawmakers that JPMorgan had a “fortress balance sheet” despite the recent loss, Sen. Robert Menendez (D-N.J.) told him he was playing “Russian roulette.” He added, “I’d like to remind you that fortress balance sheet has a moat that was dug by taxpayers to the tune of $25 billion in bailout money and more than $450 billion in loans from the Fed.”
Menendez was referring to the George W. Bush administration’s investments in JPMorgan and most other major banks as part of the Troubled Assets Relief Program in 2008, as well as emergency Federal Reserve lending to banks during the crisis.
Merkley later pressed that same point, and Dimon showed his frustration.
“Wouldn’t JPMorgan have gone down without the massive federal intervention, both directly and indirectly, in 2008 or 2009?” Merkley asked.