JPMorgan may suffer a black eye and some embarrassment from its $2 billion trading loss but the bank will get through this dark time and get back to adding value for shareholders, says the bank's CEO Jamie Dimon.
Dimon appeared before the Senate Banking Committee to explain how the financial institution, which came through the financial crisis comparably unscathed compared to most of its peers, lost at least $2 billion in the so-called London Whale trade, a hedging loss that has sparked fresh calls for more bank regulation.
"It's going to be really bad. We really need to put on (our) jerseys, figure out, and we're going to get through this," Dimon told CNBC after the hearing, when asked what he'll tell his employees next.
"We're going to wrestle it down, we're going to confess our sins, we're going to move on and hopefully we're not going to take our eye off the ball, which is (to) run our business."
Dimon had originally downplayed the massive bets taken at the hedging unit of the bank before the loss, referring to the concerns that trades were getting too big and risky at the time as a "tempest in a tea pot."
"Almost everyone up and down the line thought this was temporary, it was a small thing blown way out of proportion," Dimon said.
"I obviously believed it. I obviously was wrong."
Lawmakers wanted to know if the trade in question was a hedge or a speculative bet, the latter of which would have violated the Volcker Rule were it in effect.
The Volcker Rule prohibits banks from using their own money to trade in financial markets for gain and has been approved though not yet implemented.
"This particular synthetic credit portfolio was intended to earn a lot of revenue if there was a crisis. I consider that a hedge," Dimon told lawmakers in the congressional hearing, according to Reuters.
"What it morphed into, I will not try to defend."
Dimon added during the hearing that JPMorgan's "fortress balance sheet remains intact," and expects a profitable second quarter.
Democratic Senator Robert Menendez was quick to remind Dimon that his bank received $25 billion in federal support during the financial crisis.
"I think about the fortress balance sheet you talked about and I would like to remind you that the fortress balance sheet has a moat that was dug by taxpayers... So it seems to be that the American people are a big part of making your bank healthy," Menendez said, Reuters adds.
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