how does that transpire cute diouf to assure the occ that you plan on reducing the portfolio and yet in actuality it tripled in size. how does that happen? was the occ misled? >> if you will allow me to explain, i wasn't in the meeting when mr. willmonde met with the occ but the plan has signed off by all senior management including myself was to reduce our wa over the course of the total 2012. we asked for and received permission to have a slightly higher capital number for the first quarter before embarking on a rapid reduction from the second quarter forward and things went terribly wrong as we all know then there in large purchases that were made at the

end of large were not brought to my attention on time. >> was a your responsibility to fully disclose the true nature of the f c p and its increasing size to the occ? and did you? >> my responsibility to be fully transparent but it was not my responsibility to discuss information directly with the occ. >> mr and 14, you were born in early 2012 as a matter of record that miss the left wrist measures predicted massive losses. after the bank lost $6 billion you stand by your statement that risk measures for, quote, garbage and not, quote, sensible? >> you are referring to two different risk measures. the results of the testing which i called garbage which is not an

appropriate word and not typical of my response to these things which i take very seriously, that was part of a process we are working on to develop a model for the new c r m regulatory capital requirements and that was the very first reaction to number in that was two or three times what we had seen previously and after s we made my first reaction was doesn't look clearly as we discussed a little earlier. it turned out to be -- it turned out to be predictive. with respect to the second reference that you made, in fact, when that limit was first breach, it is true the methodology we using was not

appropriate, the decision was made to make a change. the change was not made so there was a mistake in not making the change immediately and there was a missed opportunity to also have interpreted that as a sign of something we didn't see at the time. >> in a later e-mail you said we are working on a new set of limits for synthetic credit and the current c s o one will be replaced by something more sensible and granular. mr. bacon, there are firm why risk limits at jpmorgan. is that true? >> yes. >> were those breachy ignored? >> they were not added goerge. specifically the one i expect

your referring to in january, it was not ignored. it caused action and escalation. it was a situation where we relied upon the explanation that turned out to be wrong about the new model, implementations that was agreed by the risk-management in place of the time by multiple review or trailed or reliance was erroneously placed on that. >> let me tell you what is hard to explain to my constituents when their tax dollars are insuring their deposits. they are going to ask how could we possibly balloon up to

$6 billion loss and basically not only ignoring the facts but sort of endorsing the behavior for and it seemed that the traders seemed to have more responsibility and authority than the higher a executives. i have to go to a town hall meeting in arizona. you tell me what i am supposed to tell my constituents and with their tax dollars some of these deposits were insured, this kind of gambling went on when there are extreme difficulties in getting their home loan mortgages consummated and obtained but tell me, mr. bacon,

what should i say? >> i think first of all, we should be clear that this whole thing is regrettable and unacceptable and we believe isolated but the onus of proof is on us to demonstrate how this can't happen in other places, how we whether the financial crisis well everywhere else and how we can make the entire firm a safer place to the satisfaction of you and everybody else and our regulators. this failed because of multiple things that should -- did not catch it. the two obvious ones, trading oversight, management oversight on the ground in london failed completely and second whines of defense, risk primarily and finance after that also failed with the granularity limits and escalation and push back through risk committees, this failed. it would have been easy to catch

this in many ways and very regrettably it didn't happen. i believe we have taken corrective actions on all these counts. >> do you believe jpmorgan is too big to fail? >> i don't think it is too big to fail. i think there is work that needs to be done to demonstrate and to document that and it is in process. i am not deeply involved in that but it needs to be demonstrated to everyone's satisfaction. >> thank you, mr. chair. >> you indicated in response to a question, peter welland, a with your job to enforce risk limits with senior management. is that correct? the bank had five key west limits, those risk limits may be complicated but the bottom line is they sound alarms when it looks like an investment portfolio is putting money at risk or what looks like

projected losses exceed a dollar limit that was set up ahead of time. if you take a look at exhibit 1 the there are risk limit breaches. the environment that was breached starting in january, it was changed. a new model was put into place. we had a conversation about that and a lot more later on. but the breach which occurred even before the breach was the so-called c s 01 breech and that lasted longer. you can see long red block, the cso 1 stands for what?

>> credits read 01, the value of a basis point moving credit spreads. >> credit spread of one basis point. take a look at exhibit 39 if you would, peter welland. this exhibit lists the breaches from september 20, 2011, through april 30, 2012. it is page after page after page after page after page of breaches. by the way, most of them change the model. if you look just at the breaches

involving the fdp, in the last quarter of 2011 and the first quarter of 2012 you see a huge jump. six breeches in the synthetic credit portfolio to over 170 breaches so from the last quarter of 2011, the first quarter of 2012, the number of breaches jumped 6 to 170 and in april of 2012, there were 116 reaches. so almost as many in that one month of april as the three previous months combined and those three month had 160, 70 breaches compared to the six in

the previous quarter. would you agree that when you have that kind of a huge jump in raise limit breaches that that is a worrisome pattern? would you agree to that? >> large jump is a worrisome pattern but i would say by april the action of trading already occurred, breaches and risk metrics can change even without making trades or changing positions the market's move and the team at that point has was written and mention somewhere else in crisis mode trying to figure out the best way forward to escape from the position we bring in at that time. >> you stopped the trading -- what date in april was that? >> my recollection was after -- it is in the report somewhere.

>> late march. you stopped trading. when more than one risk limit is reached at a time, does that send a stronger single that the portfolio is overly risky? >> it may. a depends. different types of measures it certainly does. sometimes in an individual position can trigger several wilmot's aware the portfolios are organized so it depends on the situation. >> was a synthetic credit portfolio a low-risk investment portfolio? >> no it wasn't. >> you have multiple breaches going on in huge numbers in the first quarter, cook until the end of march to act when those

breaches were flowing in and you see that many before in a portfolio? >> no. what i would say is there are a couple different circumstances. as i already said, we missed an opportunity to understand s early and given that the plan was to change limits, continued to breach because we were working on the changes. there were active discussions how to deal with it. continuing to have the breaches as long as anyone understands they're happening was a good thing which would help keep the focus on the portfolio. >> the breaches are not a good thing.

so now let's look at the c s 01 limit, the value of derivatives in a portfolio drops by the specified amount, technical terms and a credit spreads widen for a specified derivatives by 1.1 basis point, the reference, synthetic credit portfolio first breached its limit on january 6th and kept breeching for three month. on april 19th after the media storm hit the occ send you an e-mail if you look at exhibits 65. it asks you about that risk limit which has been in excess by 1,074% for 71 days. the e-mail says an accession by 1,074% means the synthetic credit portfolio is breached by

1,000%. is that correct? >> correct. >> so it was ten time the limits and in exhibit 39 which we discussed earlier which was list of the breaches indicates on april 19th that the limit was $5 billion. and if the credit spreads widened one basis point, fifty-nine million dollars. is that correct? you responded by saying, quote, we are all working on a new set of limits in the currency as own 1 to be replaced by something sensible and granular. you were ignoring the 1,000%

reach limit for 71 days because the c s 01 limit was insensible. if it was outdated, not sensible, why take that long to update? bank policy requires, the occ requires risk limits be updated every year. why wasn't the c s 01 limits updated? it hasn't been updated since 2009? >> they have been the same since 2009. >> the policy of the bank is is this the updated every year and this was reach for 71 days 1,000%. so three is when you have a rule in the bank and occ will saying it is updated every year, 71 days ago by looking like that. how do you explain that? >> we were in the midst of a limit re-evaluation at that time. >> 4 three years? >> was begun in the summer of

2011 but at the time there were a lot of changes going on in the regulatory environment and the market. we were very focused on the regulatory capital models up to speed and working properly and adjusting the business to deal with those. those things took priority. is another mistake of hours but it was all in good faith and what we knew at the time to be the case. the change in that limit did not take first priority at that time. >> for three years you were supposed to every year be looking at that risk and didn't revise it. this tied hits you, 70 days, 1,000 persons, ten time is the limit, 76 days.

and year after year, were you aware of the breach? >> yes. >> why didn't you fix it? >> my understanding was it was in the process of being reviewed and i was told by risk that it was not a useful limits and it was going to be replaced via more useful limit which was being worked on in the risk group inside and outside. >> if you look at the exhibit, this is what you said when the c i o's chief risk officer wrote to you about this breach in an e-mail dated february 13, 2012. he said we have a global credit c spv 1, as i understand it, the 01 ltd. another name for the cs01 limit. was set up as a credit.

we have been preaching for most of the year. this is what you responded, you said i have no memory of this limit. i think you just told us you were aware of the breach of that limit. you told him you didn't have a memory of the limit. >> that is correct. my understanding was -- i didn't know there was a global limit as well as the c f p d limit and mr. goldman was referring in the e-mail to a global limits and i probably simply misunderstood and that is why i followed it with it needs to be recast with all the other limits which is a review that i was assured was ongoing and was making some progress. >> did you know these limits are supposed to be reviewed every

year? >> yes. >> are you aware of the fact that it wasn't and hadn't been reviewed every year? >> i don't recall. >> were you aware it was 1,000% over the limit? >> i was not. >> senator mccain. >> no further questions. >> thank you. >> very quickly, then we are going to take a break and add to our panel. a second risk limits on this chart, exhibit 1 they known as the value of risk which sets of dollar limit how much money is at risk of being lost over the course of a day in ordinary market conditions. mathematical model is used to evaluate how much value an investment portfolio is putting at risk.

if the value exceeds the borrowing limit established for the portfolio and it goes to the risk manager. synthetic credit portfolio breach both the cio and banking limits for several days starting on january 16th and breached them again for four days starting on january 24th, jamie dimon personally approved a temporary increase as a matter of fact until the cio rushed for approval of a new model that was referred to as effectively as an end run around risk limits and when it was activated on january 27th if it resulted in an overnight drop when a new bar limit was activated, 50% and the breach ended without having to get rid of a single risky investment.

under the old model, it was $132 million. that is how much money was at risk in one day period. when the new model to affect even though the portfolio had the same risky credit derivatives its value was cut in half. now it is $66 billion and guess what? that new amount was under the limit. the new limit. how did you know the new model was going to be more accurate? >> it was a change in a review that had been met on going for not one or two but seven month by the independent risk modeling group and my understanding was it had gone through quite a few

iterations until it arrived in its final form as the correct measure, one that i relied on very heavily to manage the physician. >> did you back test the new model against the old data? >> it would have been done in arrest. >> the know why was done? >> i do not. >> you started the model reprove you group and they also say when they approved it that the cio had to automate the data entry? isn't that true? >> if they did it would have been an order that would have gone to risk. >> you are not aware that they said you had to automate the data entry when they approve the bar model. right? >> at the time i was not. i am aware of that now. >> the task for the report of

the bank said that back testing -- do you know, there was no back testing that was done. is that correct? >> i said i do not know. >> take a look at exhibit 98. >> 98. >> it is page 104. here is --

>> got that page. >> this is what the review group says. in this case the model review group require -- this is what the review said about what happened when the new bar was put in place that the model review group required limited back testing of a new model and that is number one, critical of that and there was no back testing and limited back testing and insufficiently analyzed the results that were submitted so you have a situation, a new bar that was dropped and suddenly it is no longer a breach. and it was approved when it was approved it was approved with the requirements that there would only be limited back testing of the new model as soon

as back testing to see if it was workable and it analyze the results that were submitted, it produced lower bars and full of operational errors. didn't supply the funds. and to deal with the operational tears. and it was by 50% overnight. what do you think about that? >> it was something which would require a lot of inquiry. >> like back testing? >> it deserves back testing. and what it did provide, the

insufficient, the back testing wasn't analyzed. is that correct? >> it is not the way to do it. >> it is not analyze. is that correct? >> i don't know. >> that is what the report said. >> i am sure that is right. >> the new model depending on analyzing daily stream of new trading data instead of constructing an automated data base that would automatically feed the daily trading data into a the a our model, the designer was stuck with having to manually enter trading data using spreadsheets which had calculation and formula errors. in other words the new key value at risk model for the seat -- for the cio's portfolio included the synthetic credit portfolio being run manually using error

prone spreadsheets with operational flaws. did you know that mr. hagen was doing nightly manual data entry and sometimes staying up to the wee hours of the night to get it done? were you aware of that fact? >> i wasn't aware of the details of the manual work he was doing. there were spreadsheet involved and i did know that he often stayed late at night. >> mr. bacon, the operational problem, the spread sheets, lack of automated data base, calculation of formal errors which lowered these var results were shocking and unacceptable. they agree? >> i do. >> ina drew, why did the bank model review and approve the var say -- why did they approve the var knowing there were problems that allowed to operate in such

a shoddy fashion? why did the bank allow that to happen? >> it is very disappointing. i have no idea. the independent group staffs by very well trained and educated ph.d.s to run a models, i am certainly very disappointed it was not reviewed properly. >> did hagan work for your group? >> he did in london. >> if you take a look at the charge it is not just the multiple risk limits were breached, they were not even move limits. nobody was told to stop trading because of a risk limit breach, no one investigated the trading because of the breaches and mr. bake them, should someone have invested risky trading activities? isn't that a point? that someone would investigate the breaches? >> yes. >> the bank's reaction has been

to criticize the cio's old risk limits, they have a bunch of new ones. now we have five risk limits. now it has gone to 130 risk limits with the synthetic credit portfolio. this is the point. it wasn't that the synthetic credit portfolio had too few risk limits. the risk management personnel did not enforce the one they had. i don't see how piling on another 225 risk limits solves anything. you want to comment on that? >> yes. i very much agree with you that the first failure is not to escalate or remediator one risk limits is put in place already telling you something. and one of the changes is to uphold policies and procedures whereby automatically it is a

breach for three days and goes to the risk committee containing jamie dimon, our cfo, myself and everybody. and the question whether it was necessary to have more limits, this particular egregious mistake was caught by a small number of limits if you had followed up on them. there are other mistakes you could make that may not have been caught by a small set of limits which is why we want to be safer than that. >> we are going to take a very, very -- excuse me. we are going to take a five minute break here. we are going to widen our panel to give us an opportunity to use the restroom if anybody needs to do that. will be very brief and we will be back in five minutes.

[inaudible conversations] [inaudible conversations] >> we will be back and we will now add to our panel and called two additional witnesses to the hearings, michael cavanaugh, of jpmorgan chase management task force reviewing cio losses and co-chief executive officer of the corporate investment bank at

jpmorgan chase and douglas braustein, the current vice-chairman and former chief financial officer from 2010 to 2012 at jpmorgan chase. i appreciate both of you being with us and look forward to your testimony and pursuant to the rules of the subcommittee all witnesses to testify before us are required to be sworn so i ask each of you to raise your right hand and swear the testimony you are about to give to the subcommittee will be the truth, the whole truth and nothing but the truth so help you god. do you know about the timing system? if you have opening statements now you do. put your mike on please. >> may i? >> yes. >> chairman levin, ranking member mccain and members of the

subcommittee, my name is michael cavanaugh and i am the cozy e o of corporate and investment banker at jpmorgan. as an ally recently led a task force that conducted a review of the circumstances surrounding the 2012 losses in jpmorgan's chief investment office. i appreciate the opportunity today to discuss the task force's work to describe what we found as well as the steps jpmorgan has taken in response. some of what we found was very disappointing. we are determined to become a better company as a consequence we cooperated with the subcommittee during its inquiry and as noted in my written statement we respect the key role the subcommittee has played in highlighting the importance of effective risk-management and oversight of our nation's

financial institutions. we also appreciate the courtesy extended to us by your staff. as you know earlier this year our task force issued a report which was the culmination of an extensive review. the work included interviews of many current and former jpmorgan employees and the examination of millions of documents and tens of thousands of audio files. the work was overseen by an independent review committee of the board of directors. we have also been cooperating with ongoing inquiries by governmental authorities here and in the united kingdom. because our findings are already public and set forth in my written testimony i am not going to discuss the million detail. we will summarize key conclusions and steps we have taken to address the problem we have found. the losses were the result of a number of accidental missions,

some involving personnel and some involving governments. those responsible in our view include to varying degrees the traders who designed and implemented the flow of trades, the managers who failed to that the strategy and ensure that it was sound, the risk managers who failed to serve as a robust check on trading activity, the senior management of the firm who failed to ensure the c i o was subject to the same oversight as other parts of the term. in light of what we found the firm has taken wide ranging remedial actions both within cio and throughout the firm to prevent incidents similar to this from occurring in the future. these the described in the task force report but i want to highlight for the subcommittee the more significant steps we have taken. the term has terminated the employment or accepted

resignations of the responsible cio personnel and received compensation. second, jpmorgan has appointed a new leadership team which has refocused its basic mandate. third, the firm has increased resources for the key risk and finance control functions within cio. cio has implemented new or restricted limits covering a broad granular set of risk parameters and fifth, the firm has adopted a variety of governance measures to improve its oversight and control of cio. remedial efforts have not been limited to cio. the term has among other things conduct a comprehensive self assessment of its entire risk organization and as a result is implementing a series of improvements across the entire firm. where there is room to improve we can and will do so.

with respect to the trading itself we have learned many hard lessons. in particular, that any future portfolio hedging will be subject to appropriate monitoring requirements with documentation, linking the hedge to the risks it is designed to offset. in conclusion i want to assure you this experience has caused substantial and tell the introspection at the senior management level of our firm and recognition of the need for continued improvement. thank you and i look forward to taking your questions. >> douglas braustein. >> members of the subcommittee, my name is douglas braustein and i served as vice chairman of jpmorgan chase. from 2010 to 2012 i served as executive vice president and

chief financial officer of jpmorgan. thank you for the opportunity to participate in today's hearing. michael cavanaugh has made a statement on behalf of the firm. i look forward to answering your questions today, thank you. >> thank you very much. during our investigation we came across a number of examples of the bank giving the occ examiners of hard time. in 2010 according to n occ e-mail of 2012 may when the occ concluded an exam of the cio and told ina drew that the cio needed do better job document in interest and investment decisions, you sternly told the occ that they are being overly intrusive and there with little need for more documentation since jamie dimon was aware of

the cio's investment activities. the record of your reaction is exhibit 71 and in 2012 e-mail, mr. scott waterhouse recounted the 2010 incident. the first paragraph this is what he wrote. we did and examination of the cio, have a follow-up plan, we had some concerns about overall governance and transparency in the activity. we received a lot of push back from the bank regarding our comments. she calls occ's examiner in london and sternly discuss the conclusion for 45 minutes and basically she said investment

decisions are made with a full understanding of executive management including jamie dimon. she said everyone knows what is going on and there's little need for more limits, control reports. according to this e-mail you said cio's investment decisions were made with a full understanding of executive management. >> it is true. >> according to scott waterhouse, january or february of 2012, the bank stopped sending investment bank's daily profit and loss data to the occ, just stopped sending those documents, no notice, no information, no lost data for the investment bank, one of the nation's largest. this is the investment bank we are talking about. the occ had to escalate the

issue to douglas braustein, chief financial officer of the bank to reverse the decision which you did. during a meeting between you, douglas braustein, jamie dimon and scott waterhouse was clearly jamie dimon who was responsible for directing the data cut off. is that correct? >> yes, sir. >> did the bank stopped sending the problem was data for the investment bank for period of time? >> it was approximately 32 weeks. >> do you restore that data to the occ? >> i did. >> did he order the data stop? >> prior to stopping the data in number of regulators had reaches for the information we shared with them. there had been mistaken losses

of information and we wanted to ensure prior to restarting the data we have adequate control in place to ensure that the data got to the regulators and only the regulators. >> did you notify them that that was the reason? >> i did speak to them during that period of time. >> you told me that was the reason that information was not coming to them? >> during that -- >> january and february? >> we were not delivering the data, you ordered it restored. apparently there was some heat in the conversation allegedly but in any event you ordered the data restored 5. did you during that period tell the occ why you were stopping that data? that is my question. >> the time period was earlier but i do recall somewhere in that period of time having a conversation to explain why we had turned the data. >> to did you tell? >> i can't recall if it was

scott waterhouse. >> when you gave as the explanation for cutting the debt off the same explanation you gave to them. is that when you are saying? >> i expressed that concern and told them that i would turn the data back on. >> was jamie dimon unhappy with the data? >> i don't recall the specifics of his reaction. >> you don't recall that there was some deep unhappiness when it was restored despite his order? >> i don't recall the specifics of that interaction. >> how about the generalities of it? >> as i said i don't recollect the specifics of that meeting? >> sometimes the bank went further and gave wrong information to the occ.

the january 30th already to dated january 30th quarterly meeting, cio said it was reducing the size of the synthetic credit portfolio when in fact wasn't. here are some more examples of wrong information from jpmorgan n.v. come after the media expose the trades and the occ started asking the bank for large numbers. this synthetic credit portfolio was mark to market portfolio which means again about you of the portfolio was measured and recorded internally every day. on april 16th, this is after the meteor storm hit, the bank met with the occ and provided the first presentation of the concern that a credit portfolio. ina drew, you were present for the briefing and had that briefing, the bank told the occ that the first quarter losses were $580 million and that is in

exhibit 16 but actually the losses at the end of the first quarter on march 30 first had been reported inside the bank as $719 billion. if you look at exhibit 1 g. this is a list of that was provided i believe in a of all of the internal profit loss reports and if you will look there, you can see that march 13th, it was $718 million according to the bank act internal reports but was reported to the occ was

$580 million. not only that, but on the friday before the monday, april 16th public report that you were involved in, douglas braustein, the bank met with the occ and losses at more than doubled to $1.2 billion so before the april 16th conference call, two things have happened. one is the report that the first quarter losses were $580 million were wrong according to the bank's own records, it was $719 million and before april 16th the friday before

april 16th, the losses had more than doubled to $1.2 billion so ina drew, why did you tell lead content that it was $580 million, and in $719 million. >> it was the number that was accurate, finance bad as it always does post the quarter end reserves on top of mark to market losses and the aggregate was given to the occ. >> it is separate from the reserve. the losses reported on this chart, and -- >> the number was given to me given by some for risk. >> whenever the number was

given. and it was given to you. >> the total profit and consolidated loss statement given to me the day i met with the regulators and was reviewed by the chief financial officer. i knew that to be the correct number. >> when you met with the occ on april 16th that was the number you gave them. correct? >> i gave them whatever number. >> look at that exhibit. >> first quarter was march 30 first. seems to have $719 million. take a look at april 13th. you see that number? on april 13th? $1.2 billion. you see that? the number you gave to occ on

april 16th was $580 million and your own report shows 1.2, your internal report shows $1.2 billion. the friday before you met the occ your internal report showed $1.2 billion loss according to your records but you told the occ that the losses are $580 billion. why not give them the loss as of april 13th the friday before you met with them. >> to the best of my knowledge, had profits lost daily reports and the number -- >> say that again. >> best of my knowledge the occ was given daily mark foster market reports.

>> on january, february, march and april, daily profs loss. >> that is my understanding. >> in the synthetic credit portfolio. >> the mark to market activities. and it was included. >> is that identified? was that identified separately? the dailies? and identified separately on those reports? >> i do not know. >> i think you are inaccurate about this but we will find out. >> thank you, mr. chairman. douglas braustein, let me be clear for the record, regulation, regular reports are required to go to the occ.

is that correct? >> i believe so. >> and yet jamie dimon then made the decision for two weeks at a critical time not to send reports to the occ. is that correct? >> that is correct based on a concern of the confidentiality of those reports. >> normal citizens, normal enterprises, by regulation, required to do something, and you don't want to do it and to avoid it, do we live in a world that government regulations of business and our lives we just decides, we are not concerned about something and not going to comply with regulations, is that how jpmorgan works? >> it does not. >> did it work that way in this

case? >> the reports in question, i am not aware it was a report required to be provided to the regulators. we were also concerned about the loss of some confidential information and we wanted to ensure we had procedures in place to avoid that going forward. >> i guess we can find out whether those reports are required or not although i believe they are. was there any other time where an executive decision was made? we won't send these reports to the occ? >> not that i am aware of. >> it seems to me it is a remarkable -- that if you are required to make reports or been making reports regularly to

regulators, routine basis, this is a time of the timing is very interesting, decides not to give a report. i am not sure there are many organizations that could get away with such a thing and it is the testimony to the lack of action on the part of the regulators if they expected those reports, i would like to go back to this e-mail from scott waterhouse, it says we did an examination of cio at the end of 2010, we had some concerns about overall governance and transparency of the activities, received a lot of push back

regarding our comments. i recall in london, and discussed conclusions for 45 minutes, basically she said an investment decision was made with the understanding of executive management including jamie dimon. did that include you? those decisions that you had full understanding of the investments that were made? >> i am not familiar with what specifically was referred to in that statement. >> let me try to help you out. she was referring to concerns about overall governance and transparency of the activities. >> i would say, senator, we endeavor to be fully transparent with the regulators and i would certainly have supported that

transparency as specific investment decisions i was certainly aware of the synthetic present product. >> you said on april 13th that the firm was, quote, very comfortable with positions in the fcc, as michael cavanaugh pointed out that statement was wrong. when do you learn your statement was false and did you take any efforts to correct the record? >> based on the benefit of hindsight, the bank and i were misinformed and correct when i said we were very comfortable. based on information i had available to me at the time from a whole range of sources, independent work done, i believe that to be true, passes i discovered there were behavior patterns, in consistent subsequent to the thirteenth in

the portfolio's performance, myself and jamie dimon, john hogan, began a much deeper inquiry. >> besides the traders who miss marked the book, who should be held accountable or has anyone been held accountable aside from the traders for breaching jpmorgan's own internal risk limits and adjusting the risk models? >> is that a question for me? >> yes. besides the traders, i am sorry, besides the traders who miss marks the book who should be held accountable for breaching jpmorgan's and internal risk limits and adjusting the risk models? >> an aggregate, the task force's report that there were a number of mistakes made in the risk organization, the finance organization which i ran and as senior management and i deeply

regret those mistakes. >> when you are, quote, held accountable, what penalty is there that is imposed when you are held accountable at jpmorgan? >> the firm has taken a number of actions, they terminate the employment of a number of employees, clawed back traders. they have clawed back compensation and reduced compensation for selected individuals. >> so we reduced compensation, for example your compensation was reduced? >> yes. >> from what to what? >> approximately 50% consistent with the board's actions for jamie dimon. >> translated into dollars? >> i move from $9.5 million in compensation in 2011 to

$5 million in 2012. >> what was the final amount the c i o lost as a result of the trades? >> $5.8 billion through june 30th, last year and some modest losses followed. >> besides this subcommittee's investigation what are jpmorgan's ongoing legal and financial exposures including penalties already paid stemming from the trades? >> i don't have the number for you, senator. we are in the middle of on going regulatory work and examination and there will be litigation but we don't have any estimate yet for exposure financially