recent trading losses and loss reserves against its loan portfolio. it provided that lending exposure to credit was and is the largest risk facing american banks today. we must keep this in mind as today's hearing has focused on whether it is appropriate or not, the volcker rule, and the attempt to make banks -- to have banks makes so-called risky investments. in the years leading up to the financial crisis, there was hardly riskier proposition than extending mortgage loans in the midst of an artificially inflated housing bubble. look no further than fannie mae and freddie mac to did not need to make proprietary trades in order to lose $200 billion of taxpayer money. the irony is that had the volcker rule been in effect prior to the crisis, is likely that banks would have had even

more exposure to the housing bubble and the crisis would have been far deeper and for worse. someone once said that like energy, risk is not created or destroyed, it is simply transferred. i feel a push for ever more regulation in our economy and that represents a continued misunderstanding of our banking system and the roots of the financial crisis. this misunderstanding is by itself a great risk to our financial system and the economy as a move forward. with the bat said, during your testimony in the sound last week and, you stated that we could do not actually know who has jurisdiction over many issues we deal with any more. did congress an opportunity -- miss an opportunity with dodd- frank to simplify our regulatory structure and put an end to regulators passing the buck to one another? >> it would have been my preference that will simplify

it and made more complicated, yes. >> how do you respond to those who cite jpmorgan's recent trading loss as evidence that jpmorgan and other banks are simply too large and complex to manage? >> there are huge benefits to size. you see them in the kaiser scale and an aircraft and banking and diversification. we are a port in the storm because our size and diversity. the benefit of size has got to get through to a client. there is some negative to size. if your lack of attention to detail, some of happens to small firms, to and you have to weigh them out. the company at the is doing a great job for shareholders and clients and we continue to grow and expand. businesses are serving more people in the united states and

around the world. we're helping a lot of american corporations travel around the world and helping them do a better judge whether want to do business. >> if the activities of the chief investment officer at jpmorgan were severely restricted under the volcker rule especially to the point where portfolio hedging was disallowed, what would that do to the risk profile of the c i o? >> we would probably does modify the risk profile a little bit. we would try to make sure we're not taking undue risks. the afs portfolio has an $8 billion unrealized profit. is invested rather shorter term to protect us from rapidly rising interest rates. >> i understand the cia

portfolio is around $7 billion of excess deposits? >> $350 billion. >> if the activities were restricted, jpmorgan would be left with the unappealing options of lowering underwriting standards or increasing risk. is that a false assumption? >> it is possible, yes. >> if the volcker rule or implemented, it is likely that overall risk of the financial system would actually be increased? >> i would love to answer the question but i don't know. we have hundreds that are all being done together so i cannot tell you the cumulative effect. >> thank you. mr. meeks for 5 minutes. >> i have been listening and i

think there is another reason why you are here. some of it has to deal with the fact -- has to do appal this, quite honestly. i feel dodd-frank has a role some regulations of this thing, i think we need the regulation. the secretary of the treasury came and said disaster was going to happen. so dodd-frank and into existence because we want to fix the problem so we would not be where we were when we had this terrible catastrophe. during that debate, and i want to pick up some place where

representative maloney was sought about, there was concern about a lot of individuals doing business in london. that has been some of the questions that have been taking place. i understand read to get the best deal 04 your investors. i kept hearing about this london loophole. what i've heard you answering to is that there is no london loophole. it was not due to any regulations or lack of regulations in london. yet when i talked to not you but a number of other financial institutions, i am from york also and i talk to them, and they tell me that if we put certain regulations in place,

they will still leave york and go to london because they have less regulations in london. isn'tt understand -- there some kind of loophole in london that maybe other zero institutions -- if they put these regulations in place, maybe they will leave york, and take those jobs with them? they will take those jobs with them to london. why is that if there is no london loophole? >> it has nothing to do with any loophole. it could happen in new york. that is a separate issue. if a u.s. company calls a j.p. morgan and says making a bid on a straight swap and we cannot give them the best deal and they will get the best deal out of deutsche bank in europe, that is where they will go the rules that the transaction level

about margin, reporting and the requirements may enable the to bank to make a better deal. two things will happen -- caterpillar or the big company will get less beds and it will not be good for american company and the business will move to another bank overseas. you would see some, i don't know the headcount numbers, some firms if they can put some people overseas to to the business in foreign subsidiaries with the same company they were doing it with in the u.s. if a u.s. bank cannot do the business at all, at all, because the rules are written so broadly, then we will lose a lot of business and a lot of jobs here and they will not move to london. i assure you, that will one day be in singapore, china, and other parts of the world. >> time is so short -- last week, you referred to big dumb banks. in your opinion, could a big dump bank be successfully

resolved under title two of the dodd-frank act without harming the american economy? >> yes, but we all have work to do to harmonize the globally and get the exact rules in place. yes, believe it can be done. more work needs to be done to make it real. people have to believe it's real. we need the regulators and the people and the country to say it is doable. it was doable in the united states for years for the fdic took down continental illinois, wamu american savings bank's successfully without damaging the american economy. there are examples but it is a bigger and more complex world. >> could be done under dodd- frank? >> i think it can be done. it will take foreign jurisdictions, but italy london, working a common sets of rules. >> we are also concerned with

reference to the american taxpayer being stalked. in 2009, we wanted a farm is to resolve the banks. -- wanted a fund to resolve big banks. --the gentleman's time is up thank you mr. garrett, for five minutes. >> before you came here, one of the analogies used in the previous panels was before he gave the keys to his daughter, he wanted to make sure that the rules and regulations were out there and maybe there is a cop on the beach. the owner -- a, on the beat. there were about five on the beat and i got to the accident scene afterwards. in each case, there were going to tell us what they were going to do next time.

the analogy does not hold true because we are trying to do better than that. you gave testimony here and in the senate. the exact quote was with regard to the role of the regulators you said i think you have to give the regulators realistic objective. you said i don't think they can stop something like this from happening. there was 100 regulators embedded working full-time, getting up every day, to go to your firm to work. are we in a case where there is a little bit of a share raid here with the american public with regard to what it is that the regulators, even after 2300 pages of dodd-frank, are able to do in these circumstances? maybe they're not really able to get in to the gradual nature of things without modifications to the rules? >> realistic assumptions help.

i don't think stopping one thing but they can disseminated information, they can demand best practices and that constant audits and to make the system better in total. that's so there is pure mistakes and further between. i would never blame them for the mistake we made. maybe they can stop someone else for making a similar mistake. >> and other ranking member -- i know the ranking member was taken aback by some of your responses to dodd-frank and the legislation and how it is being implemented and that is fine. i concur and your part is to lobby for, if you will, the position for your firm on positions of these issues as far as what is best in the interest of your investors, i would presume. >> no, my highest most important thing to me is the united states of america.

and when i look back, i feel is in the interest of united states of america, not in the interest of j.p. morgan. we continue to serve our clients and that is what we will try to do. >> part of the reform that we may need in this area is what attacks the extra territorial effect? we have done that in a bipartisan manner. we have legislation to try to reform but at the same time, the previous panel came up with proposed rules and guidance and certain of these areas, the areas of various standards, two separate standards for swaps and security-based swaps and dealers. is that the appropriate manner that we should have, purely guidance rules were you don't do

a cost-benefit analysis before then or should there be a close working relationship between the cfdc and the fdic in this area? >>the cfdc should have one set of rules around derivatives and swaps. they have competing sets of rules and have not been defined yet thinking through is the right way to do it. it is hard to may imagine doing something better than that. >> you would agree we have not send that since dodd-frank has been passed into law? >> there may have been places where it was done but i am aware of it. >> to close, i thought your answer would be different to the ball rolling is set kinsman not have been different had the volcker role been fully implemented. yousef had it been law at that time there simply would not have been trades due to uncertainty

as to how it will be implemented and what trade is permissible. >> we are focused on portfolio hedging. it is the market making that allows because it's great capital markets in america to remain healthy and finance companies at a very cheap cost to investors. and issuers. that is the most important part. there are like 170 things written around that and we're concerned that will stifle the capital markets here. if it's not done right. the regulators want to get to the right place but it is hard to do. >> i yield back up. >> mr. kapawanna for 5 minutes. >> i have agreed with a lot of the statements you make. that may surprise some people but it should in because i welcome your voice in the discussion about what is appropriate regulation. there is no gold an answer.

-- there is no gold an answer. golden answer. you have clearly stated that you're not too big to fail. i agree with you but some of my colleagues, it is good they finally hear that part of thought we handled that in dodd- frank.

notuld suggest that you're wrong about competitiveness. nobody's goal is to try to regulate you into a competitive disadvantage. i think that is what the rule is tryingb to accomplish isasel 3 is a classic example. is a step in the direction of trying to get the major countries around to have similar approaches toward financial institutions. there are still loopholes whether you take advantage of them or not. they exist in london and

elsewhere which is why people are there. you may not be there for that reason, i don't know and i don't really mind whether you are because you're one institution. the institution of j.p. morgan is of little interest to me. i am interested in the entire system and the u.s. competitive advantage. when you have a loophole in london or anywhere else that people take advantage of, we need to talk about it openly and try to find out whether the regulation is better than ours and whether the regulation is worse than ours and how we can work them together so the loophole is not just for you but also your competitors, it does not give them an advantage. when you say you are looking out for the best field, you are right. if it is only about the bottom line best deal, you would be loading your money on the corner of a street someplace because they get a better deal than you do. they alone their money and much better rate and you get. the difference is, is less secure when you talk about the

best deal, it is not just bottom-line greed is also the ability to get the loans paid back. is that -- you are not just looking a the bottom line. >> i'm looking for the best deal for the client. we will not win the business if we don't give them the best deal. >> exec right, but the best deal is more than just the lowest common denominator. it is also security and stability and operations under the rule of law to know what those rules are so you know the deal you're making is the deal you can report. is that fair? >> yes. >> we're not that far off. one thing that is happening today, there is another committee meeting where they will cut out $25 million from the cft's ability to pay their staff. do you think that is a smart thing to cut the ability of regulators to do their job? >> i have never looked at their budget. we have duplication and i

prefer we stick to duplication before we throw more money at it. i can create more staff tomorrow at our company but it is not necessary. >> do you think it is a smart idea? with the regulatory regime have today, we agree it is not what we want but it is what we have. is it a smart idea to cut the legs out of one of those major regulators? >> i will leave that to you. i have enough problems. >> i only ask because you have no hesitancy to express opinions on other matters. >> i know nothing about their budget. i know nothing. >> i would like you to get back to was on that. i would like to hear your answer before we vote on the floor. >> you do know we are in serious trouble down here on our budget. you'd rather have your budget and ours? >> no comment. [laughter]

in terms of the loss for j.p. morgan in april was bank hedging. that was within the institution but i have introduced legislation that passed unanimously through our subcommittee and committee to repeal most of the swaps in section 17 of dodd-frank. it strikes me that this example of the potential risk undertaken and there's always risk involved and there will be losses but the potential risk undertaken in these sort of activities would seem perhaps to highlight the need for us to keep those activities within institutions where they are more regulated, if you will. i would appreciate your comment and i would agree with that. i never understood the push out.

>> i never understood why it was put in there and all. >> we have broad support for that so i'm hopeful that we can move that through. expeditiously. with regard to the fact that derivatives activities seem to be concentrated in london, i get the sense because they are the specialists. chairman gansler implied that the rules are inadequate governing those activities. and yet through the g20, regulators have coordinated fairly closely. do you feel there is a need for the sec to come out with a ruling on extraterritorial activity -- do you feel we need to have some regulation that we apply to our subsidiaries?

>> no, i have been clear. the laws should be close to what they have over there so we can compete. they were always regulated. there is potential regulation at the top and the trades i mentioned were collateralized. there are 60% cleared. i don't think those rules would have mattered little. aig keeps coming up as an example, it was insured only, they're not trying to hedge in a king, it was an insurance company, they did not have regulators who understood credit derivatives and it counted as insurance contracts. there were not collateralized for it is a completely different example in a different industry. >> it was an enormous level of risk that had great implications. you cannot put the situation on to the j.p. morgan situation.

there have been questions about activities of risk committees and there are lessons you have referred to that j.p. morgan has learned. are there lessons that we can apply to what our regulators view as the criteria they use as to how our institutions take rest? >> we failed in this regard but we have strong risk committees. in the proper staff, they need to be properly reported, independence-minded, the job is to challenge management. and what can go wrong and that's what those committees are supposed to do, proper supports, granular limits and protecting the management from itself sometimes. our risk committee's report independently and in this particular case, the risk committee made the same lack of oversight that was made down the

line about this one activity. it was in the synthetic credit activity that should of been much tougher. >> j.p. morgan has regulators in house who closely monitor your activities. is there an element of human nature that makes us to a certain extent comfortable with each other in how we do things that may lend a certain amount of hazzard to these relationships over time? >> no, they can be pretty tough but what happens sometimes is that human nature says it is ok and the next person does not spend that much time on it. >> because you have a track record? >> all of us, you cannot be complacent about risk. it is not whether you trust the person because a trust a lot of people. it gets to be -- it needs to be independently verified. >> trust and verify -- thank you

very much. >> mr. dimon, thank you for your testimony. the reason j.p. morgan loss comes at a time when we have many in your industry complaining about the new regulations that were put in place for the dodd-frank wall street reform act. for good reason, the $2 billion plus loss has pushed pause button on attempted rollbacks to dodd-frank. it seems to me with the recent conviction, of a prominent wall street corporate director, wall street firms did not seem to be going out of their way to restore trust with the american people. i understand that j.p. morgan will still turn a profit this year but the sizable loss and the complexity of the trades and

macro-hedging the cause blas still is cause for concern. there needs to be an evaluation of not only prevent regulations but also the broken culture on wall street. it is a culture that some believe provides perverse incentives to play fast and loose with other people's money. after the crisis, there should have been major self reflection and re-evaluation of wall street. looking back at this loss, do you feel that the compensation structure at j.p. morgan might have created incentives for excessive risk? >> i don't agree with what you said about wall street. i think there s are a lot of people you can trust on wall street. there are people you can trust and where and when anyone blankets a whole industry with the same thing, i think we make a mistake. it is like when people like all of congress. i don't like it is fair. we try to have a culture at the

company where people have long term careers. they're not paid just because of profits. their pay because they're good managers and recruit and retain and they're open-minded and independent on risk committees. they participate in the company and mentor younger people. that is what we do. it is not just financial results that draws people compensation at j.p. morgan. no one in this area had formulas. it's possible that a lot of it was driven by money. that should be no great surprise that some people are driven by money but some people are not. >> next question -- do you feel there is a problem with wall street's culture? >> i think there might be a problem with some people on wall street. wall street, for the most part, are honest decent hard-working people their clients' trust them and to the extent we lose it, we should earn it back. when you talk to most of our clients, they think j.p. morgan

tries to do a good job for them. women make a mistake, we admit it and try to rectify it. -- when we make a mistake, we admit it, and try to rectify it. >> mr.dimon, what would you personally recommend be done by congress to strengthen the dodd- frank act so we can prevent actions with the complexity of trades in risky derivatives and macro hedging that costs will loss of the least $2 billion at j.p. morgan which brought us to this congressional hearing? we want to ensure that similar losses do not occur in other banks. i would like to hear your recommendations. >> i have lost this argument publicly many times but i will make it again -- regulation is not by merit. it is not left or right. these are complex things that

should be done the right way in closed rooms. i don't think you make a lot a progress and an open hearing like this. you need to talk about what works and was -- what does not work. we want to save the system, too. we have as much a vested interest as anybody else and we will do anything we can to be part of the process to make it healthy and safe. it is a lot healthier and safer today. the market did a lot of things -- no subprime mortgages, derivatives are going away, regulation has traded more capital and liquidity. it is a much stronger system today. a lot has been accomplished. >> my time has ended and i yield back. >> mr. dimon, there is this discussion, the distinction between hedging and proprietary trading. can you define the difference?

>> i will tell you what i think. the hedge is meant to protect you if something goes wrong in the decision you make. proprietary trading is making a bet that prices change you can make money on a price change. a problem with that is every time and make a loan, is proprietary. the riskiest thing we do is loans. they are all proprietary great if we lose money on them, that goes to the house account. we still make them and try to do the right thing to manage it. i never disputed the intent of the vulgar role. i would like to make the company safer. if we make something complex, it will make something hard to regulate them at his there a distinction between hedging and proprietary trading?

don't they look similar? unless they locate the origin unless there is a balanced trade and the other side? >> there is a fine line, yes. >> how long have been financed? >> a long time, 30 years. >> we will just say a long time. for a living, your spouse know the distinction. you're testifying before congress and spent time doing desperate is there a bright line distinction between that? if you cannot determine that, how can a regulator? >> i would not have set of proprietary vs hedging. if you want to make the system safer, would have said for trading, proper capital, proper liquidity, make sure to inform clients, look at aging inventory, proper risk reporting and you have the ability to hedge and you can track all these things to say if you're running a good customer business. it does not eliminate risk.

mitigates the rest. >> did you support dodd-frank? >> that is a hard one to say. we had a major crisis. >> did you support dodd-frank? >> we had a major crisis and never denied that. the crisis on veiled flaws in our system. it was lots of flaws. we understood the need for reform are there parts of dodd- frank we supported and parts of it we did not. there are lots of parts of dodd- frank. >> suffice it to say you have a little buyer's remorse. you are basically saying you understand the need for changes you just don't like the results. >> some of the results. it should be modified. >> with the whole crew rule, the distinction between the -- volcker rule, the difference

between proprietary trading and hedging, that is the debate going on now. we saidost -tarp era, we would not do bailouts. the government gets very involved in losses. we have institutionalized too big to fail and bailouts with dodd-frank. during the hearing last week with the senate, you discussed the distinction between a resolution authority and bankruptcy. would you touch on that and explain your view on what is preferable? >> i would use the word bankruptcy. bankruptcy implies the equity gets wiped out in the unsecured debt gets recovered and a court

manages the one down of the company. you need an expert like the fdic to manage the process. they've got the right people and the right structure and capability to manage that. it should be wound down and all callbacks voted, the board of directors fired and it should be wound down so does not affect the economy. the name to be buried in disgrace. >> that is called bankruptcy? >> you guys can call it whatever you what. >> you are involved in the debate. the distinction between resolution authority which is codifying to big to fail and codify and the fact the government will lift you up if you fail, therefore these trading risks can be as risky as possible, this is the crisis of the debate and why you are here today. >> it will not lift you up, they

will keep you going. >> we will put you on record as support -- as supporting that. >> mr. miller for five minutes. >> you were very dismissive last week with the senate about bloomberg article. i think you told the senate committee not to believe everything they read and it said cio had changed in the last few years from being a cautious risk mitigation unit and had become much more aggressive and much more risk-tolerant and profitable. it was your intention that become a profit center and more than 1/4 of j.p. morgan shares profits from 2010 came to from thecio trading. there was a question that you were asked from that article

that there had been a limit and traders had to liquidate and had to get out of any position. you were puzzled about that and you said you knew nothing about it. have you inquired since then if there was a limit and it was changed? >>no. >> you have not passed an organization? >> it was something in 2007 or so so i did ask them if you did say last week that the failure with these trades >> that was a rogue traders and not by letting their risk controls. you said the risk controls were not sufficient. >> they were too low -- they were too high. there should have been lower limits. >> did they have any limits? t >>he cio has limits but this unit did not have its own. >> a limit of $20 million of

losses and a close the position would be a fairly granular risk control, would it not? >> if that were true, it depends of the area but yes. >> you have been critical of j.p. morgan chase in this matter. you said it was a significant risk management failure and it is flawed and complex and fully reported and fully managed. on february 29, you filed a certification that you have adequate -- that you have adequate safeguards in place. i know you rely on your subordinates in making that certification that was that correct? >> i believe it to be, yes.

it was based on my knowledge at the time. >> and not based on knowledge of the time but based on what you know now, was that cert correct? >> that's why we're having a review to make sure we have the right things in place. that's what companies do when they have problems. they analyze and review and make determinations like that and the review is not done yet. >> it seems like that certification is intended for regulators and intended for investors. aren't investors entitled to rely that there are risk controls? >> i don't know what you have in front of you but we try to give proper disclosure to our investors. >> this is about the certification of risk controls. it is required by law presumably, it is for both regulators and for investors, isn't it? >> yes, we try to disclose what

we are supposed to texas -- what we're supposed to disclose. >> ? >> i believe the risk controls were probably being done. >> your surprised last week at the question about the $20 million limit. it appears you're hearing it for the first time. you have not -- you have not acquired since then whether that was true. i know you relied on your suburban -- support as. it seems there must be a limitation on that entitlement if you notice there may be something wrong. one way you might get other information would be from the financial press. did you read the room -- bloomberg article? >> i do remember. >> it said there was a $100 billion limitation that traders and at thecio had to close

positions once the loss $20 billion and that would seem like that would stick out. that is a big deal. >> it would not stick out to may. it happened many years ago and i would virtually pay no attention to it. >> mr. stivers for 5 minutes. >> thank you for being here today. before you were seated, we had a first panel where we have five regulators and the two things that struck me was something mr. alvarez said about capital. that is a clean have had about how your strong capital position saved this from causing j.p. morgan to have a big problem and asserts that it would not cause the rest of the system a problem. the fdic talked about risk- management. is there anything in your internal review other than

capital and risk management that has come out better lessons learned that other institutions should know? >> i think you all talked about models and implementation and making sure risk committees are independence-minded. there will be more than just that. >> f mr.rank talked about smart regulation. we had five regulators sitting in the seat before you and not one of them is really in charge of the others. they don't really coordinate and there were questions about how they share communication. no questions, from the previous panel about harmonizing the regulations between europe that they passed on march 29 with u.s. regulations and did not appear to be any lessons learned with other firms after what you go through to make sure there is real shared knowledge. do you want to comment more

about what smart regulation means to you? >> when dodd-frank was done, it had thef-stock, an oversight committee to make sure there were no gaps in the system and we supported that. it was set up with no teeth. someone should say who is responsible for mulcted -- mortgages and others as opposed to five people who have total jurisdiction. you have to see how long it takes to work at with foreign regulators. clarifying it and adjudicating disputes that giving authority responsibility to the same people would be a good thing. >> do you want to comment about the impact on a multinational financial firm like yourself with regulations in europe and regulations here that are not harmonized? >> we talk about dodd-frank which has 400 rules. accommodate basel commodatease

and rose are, out offsa in the u.k. and others. we have to deal with a lot. we're going to adjust which it was more coordinated and we dealt with the importance first and not treat everyone like they are the same peri. to a hammer everything is a nail and that is what we are doing. >> there have been a lot of questions about too big to fail. that only happens when policy makers let it happen. i'm not asking you to comment on that but that is a fact. i want to talk to you about the volcker role a little bit. you had some questions about a before but the key thing on that will be getting it right. i don't want financial institutions that can ride to the fed funds window borrowing money and putting it into a trading account and essentially

gambling with it. >> we don't. >> at the same time, you have to hedge your positions. i hope we can work with the regulators as policy makers and with the industry to craft something that makes sense. if you have any ideas for us, i have one minute if you have any ideas how to make that happen. >> people should get in a room and talk about what we want to accomplish, go for that the specifics and don't pretend you are for or against of the volcker role. we have to deal with it and it is very detailed. we do have the best capital markets and the world. we should go home at night and say that we set upon the best economy in the world, the best cattle market in the world, the best job greater in the world and we need to start doing jobs again and need to fix the mortgage market if we do, i think it will help this economy

recover quicker, not slower. >> mr. gansler talked about the advantage europe has about being in a time zone between asia and the u.s. and there have been questions about why certain trades go to london. i know you need to follow your customers or global but isn't there some advantage to that times on? >> your time is up. i think the answer was yes. >> i want to start off by paying you enter operation down in georgia tremendous compliment. georgia is number one in home foreclosures. we had a great home foreclosure event down there and i want to say a good word for your folks in georgia.

your chase homeownership center, a good job. we saved over 1700 homes so good work. i think it is important for us to set the stage. i think we in the united states of america and probably the world economy dodged a bullet. we dodged a bullet basically because of your size, because of your large mess. you were able to handle this and absorbed as loss but there's much we can learn. if i get my hands around this correctly, there was not enough attention paid early on in that game, is that correct? is that the major reason why the losses happened? >> yes. >> your reporting was diluted and the aggregate which caused the problem as well. the fundamental issue is your

risk-management tool is referred to as a value at risk. that was your model. if that is one of the use -- reason -- as were other reasons it was used to effectiveness but is predicated on a large financial institution for you are the largest financial institution in the world, certainly in the united states of america and that is why you are still profitable and taxpayers did not lose anything on this and it was effected. here is the question -- would smaller firms have been able to have those same protections using the same risk at value model as chase? >> we use lots of protections. one of many things we do to manage risk -- i should point out that their reasons for big banks and reasons for small banks. j.p. morgan chase is one of the biggest banker to banks.

i can i go through each one. there are different business models but each one should do what they need to do for their own business. >> let me ask you this -- as a result of this, should one of the things we do now -- should banking entities like k p morgan chase bank be allowed by regulators to hedge on the on positions with specific and bases as opposed to an average or portfolio basis? >> if i were the regulator, i would allow portfolio aggregate. i will give you one example. j.p. morgan has been doing banking in europe for 75 years. j.p. morgan himself used to love italy and would go there. we have exposure to italian companies that you cannot get

out of tomorrow. if the board of directors said you don't want exposure, there's one way to do it and that would be to do portfolio hedging which would accomplish part or all of that. you said to buy individual name, it would be impossible. >> i think the american people would want to know that when this happened, when you first got wind of this $2 billion loss, what was your initial reaction? >> when i fully realized it, i told our people that everything is going to happen from coming down to washington to questionable for roll and we have heard other bankers and the causes commotion inside the country, soul-searching. i said to let's admit our mistakes and fix this. we have to make changes and will be a tough time for us. however, it did not -- it should

not distract -- distract us from serving clients. we have 82 offices and we will do everything to serve the client right. i don't want this detracting from all of what ever to under 60,000 people do every day. >> i cannot let you leave without this question -- the fundamental question is this whole issue of too big to fail. how do you feel about that especially since you are the biggest of the biggest? >> our goal is not to the biggest is to be the best. everyone agrees that we have to get rid of that in any incarnation. >> get rid of too big to fail? >> we should not have that. we have to eliminate that. we have to allow a big bank to fail that does not damage the american economy and the taxpayer never pays. myrick think we are on our way to working for the things that would allow that to take place. >> thank you.

two more minutes and i will conclude our hearing. >> on april 6, bloomberg had an article and you're familiar with that article. i think "the wall street journal" had an article the same day. were you aware that the regulators had come into your shop on april 9 and expressed concerns about this article in the trades? >> i don't know if they can more we called them. we share with them so i believe some of our people spoke to irregulars and describe what they thought about it, yes. >> on tuesday, april 10, that particular position lost $300 million that day and subsequently, next tuesday and wednesday, it was smaller losses. were you familiar with those? >> yes. >> on april 13, you made a statement that it is no big deal, it is a tempest in a teapot.

was that an accurate reflection of that transaction? >> it was a positive accurate reflection. at the time, people had done work to look at the additional stress. the day it lost $300 million was the first trading day after the articles of that was expected. we showed the world our hand a little bit. the stress test showed it was not dramatic and several people believe that and report back to me. an april 13, i believe that it was a tempest in a teapot and obviously i was dead wrong. it was not the first time i was wrong and not the last. >> the concern i had was that was a couple of days after that $300 million pop which is big even in your organization. >> our folks looked at reports about how bad that could get and

stress tested it. no, but that's what we believe, i would consider that a small thing for j.p. morgan. we will have a very profitable quarter and you have to put things in perspective. >> mr. green for two minutes. >> thank you for appearing today. is it fair to say that you probably had more than 50 meetings concerning this issue we're talking about today? the fun about on this? >> yes. >> probably more than 100 and are you are amenable to talking to various people about these things associated with your business? >> i talked to people if appropriate. we operate under a lot of roles of what i can and cannot say. >> to me with congress people on occasion? >> yes. >> i want to talk to you about a

concept that is near and dear to my heart. we have been talking about too big to fail and want to talk to you about a concept i have called too small to live off. that is happening in this country. in houston, texas, we have people who are janitors and they're paid $8.35 per hour. i know this is very small compared to what we have been talking about. i think he made about $19 billion in 2011, is that right? >> yes. >> i understand you are the fourth highest paid person and made about $40 million in 2011 but there is a reason for picking the fourth highest for it with persons making this kind of money -- by the way, i salute you for it. i'm a capitalist. i commend people for making the money they make within the rules.

$47,000 is what it costs a family of four to live off of in houston and the poverty level is 23,000 per year and the average jeddah to working full time will make about $18,000 per year. that is working full time and living below the poverty line and would like to meet with you and talk to you about two small to live off of. i will pay my way and i will not use congressional funds. i would be willing to do with any place you would like. can you and i meet and talk about too small to live off? >> yes, we can. >> i will talk to you after the meeting. >> made two more the next day. -- maybe tomorrow or the next day. >> this concludes the hearing and the chair thanks our panelists for his testimony. some members may have additional questions for this panel which they may wish to submit in writing. the hearing record will be held open for 30 days to submit

written questions and post their responses in the record. this hearing is adjourned, thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

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of representatives takes up legislation to extend a ruling on federal lands and air quality standards. live coverage is from the house floor here on c-span. also today, u.s. senate continues work, farm bill live on c-span 2. live on c-span 3, starting at 10:00 eastern, the house oversight committee which is scheduled to vote on all the attorney general are colder in contempt over his handling of a fast and furious and gunrunning operation. up next here on c-span, "washington journal," with the day's headlines and your phone calls. joining us at 7:45 is the head of the state department to talk about human trafficking. as the senate this week considers the $969 billion farm bill, we will talk with the north dakota senator, a member of the agriculture committee. of the agriculture committee.