WASHINGTON — JPMorgan Chase CEO Jamie Dimon told Congress on Wednesday that senior bank executives responsible for a $2 billion trading loss will probably have some of their pay taken back by the company.
Under bank policy, stock and bonuses can be recovered from executives, even for exercising bad judgment, Dimon told the Senate Banking Commitee.
The policy has never been invoked, he said, but he strongly suggested that it will be.
“It’s likely that there will be clawbacks,” he said.
Among the most likely candidates would be Ina Drew, JPMorgan’s chief investment officer, who left the bank days after Dimon disclosed the loss on May 10. Drew oversaw the trading group responsible for the $2 billion loss.
Dimon, under close questioning about his own role in setting up the investment division responsible for the mess, declared: “We made a mistake. I’m absolutely responsible. The buck stops with me.”
The trading loss, disclosed May 10, has raised concerns that the biggest banks still pose risks to the U.S. financial system, less than four years after the financial crisis in the fall of 2008.
Dimon’s reputation for cost- cutting and perceived mastery of risk, particularly during the crisis, earned him respect in Washington. JPMorgan Chase weathered the crisis with relatively little damage.
At every turn before the committee, Dimon responded easily and in rapid-fire style to questions. He sounded notes of contrition – “We should have gotten it earlier” – but also defended the bank and his own criticism of some financial regulation.
Other than a few critical jabs from a couple of Democratic senators, the panel’s treatment of Dimon was a gentle contrast to that received by other Wall Street executives in recent years on Capitol Hill.
Lloyd Blankfein, the CEO of Goldman Sachs, was roughed up at a hearing by a Senate investigative panel over allegations that the firm steered investors toward mortgage securities it knew would likely fail.
In December, former New Jersey Gov. Jon Corzine endured grueling questioning by three different committees over the collapse of the brokerage firm MF Global, which he had led as CEO.
And a parade of financial titans were derided and grilled by congressional committees conducting autopsies of the financial crisis.
On Wednesday, Sen. Jim DeMint, R-S.C., told Dimon sympathetically that Congress manages to lose at least $2 billion every day. Referring to the bank, he said: “You appear to be in much better fiscal shape than we are as a country.”
“The intent here is really not to sit in judgment,” the senator said.
Far from crouching, Dimon struck a posture as something of a public advocate as the hearing ended. He urged Congress to act quickly to avoid the so-called fiscal cliff at the end of this year, when billions of dollars in tax cuts will expire and billions more in automatic government spending cuts will take effect.
JOIN THE DISCUSSION | Register here
We welcome comments. Please keep them civil, short and to the point. ALL CAPS, spam, obscene, profane, abusive and off topic comments will be deleted. Repeat offenders will be blocked. Thanks for taking part — and abiding by these simple rules. A thorough explanation of rules of conduct can be found in our Terms of Service. If you have any questions, including why your comment may not be showing immediately after you submit it, be sure to visit the commenting FAQ.