June 19 (Bloomberg) -- U.S. House members criticized regulators today for failing to detect JPMorgan Chase & Co.’s loss of at least $2 billion on risky derivatives trades and pressed for additional measures to ensure similar losses don’t occur in other banks.
The heads of the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Securities and Exchange Commission and Commodity Futures Trading Commission, along with a senior Federal Reserve official offered testimony about the loss at a House Financial Services Committee hearing in Washington. JPMorgan Chief Executive Officer Jamie Dimon was to take questions later in the day.
“Just as JPMorgan should be and is being held accountable for its risk management failures, accountability must also be of the federal regulators who oversee the bank’s activities,” said Representative Spencer Bachus, the Alabama Republican who chairs the House Financial Services Committee. “Unfortunately, because Dodd-Frank failed to consolidate and streamline the current convoluted and chaotic regulatory structure, as House Republicans proposed, achieving regulatory accountability is every bit as important now as during the height of the financial crisis.”
The hearing drew protests from about two dozen nurses wearing green and red caps and red nursing shirts holding protest signs and chanting “Jamie Dimon, you’re no good. The people need a Robin Hood.”
“He’s a really good example of the kind of reckless speculation that should be taxed,” said Matthew Kavanagh, director of U.S. advocacy for Health Gap, an AIDS activist organization that organized the protest with National Nurses United. The groups are lobbying for a “Robin Hood” tax on derivatives, stock, currency and other Wall Street transactions to subsidize health care benefits.
In the hearing, SEC Chairman Mary Schapiro told lawmakers her agency is focused on JPMorgan’s disclosures while banking regulators detailed their review of the firm’s risk management practices.
“The Federal Reserve continues to evaluate whether the governance, risk management and control weaknesses exposed by this incident may be present in other parts of the firm,” Scott Alvarez, the Fed’s general counsel said. “To date, we have found no evidence that they are, but this work is not yet complete.”
Dimon’s appearance was to be his second on Capitol Hill in less than a week. He wasn’t expected to fare as easily as he did when members of the Senate Banking Committee spent much of their June 13 hearing complimenting Dimon or asking for his advice on financial laws, banking analysts said.
“He won’t get lawmakers apologizing for asking him questions like in the Senate,” said Paul Miller, a former examiner for the Federal Reserve Bank of Philadelphia and analyst at FBR Capital Markets in Arlington, Virginia. “There will probably be more outrage. They won’t be as friendly.”
The House hearing was expected to last longer and be less controlled as Dimon faces more than 60 lawmakers, most of whom are up for re-election in November and motivated to capture local headlines, said Mark Calabria, director of financial regulation studies at the Cato Institute and a former senior aide to the Senate Banking Committee.
“The harsher and crazier that they can get, the more of a chance that they’ll get press coverage,” Calabria said. “It’s the House, so there’s always a bit more wildness to it.”