j.p. morgan chase covering losses elsewhere now these are just assumptions and allegations but i was unaware that j.p. morgan even had anything to do that that they were a big player in the markets i assumed when he was saying the banks he was in say goldman sachs and said he said j.p. morgan so i went to google and i said j.p. morgan oil trading comes up headline that was not covered by anybody but the chicago tribune j.p. morgan fined for wash trades in oil and gasoline so max what is a wash trade won't wash trends are entering into the market will sign simultaneously with buy and sell orders for the sole purpose of manipulating the price of j.p. morgan is it was engaged in massive wash training as a relates to the oil market to manipulate the price higher and as you alluded to they've got losses elsewhere on their books elsewhere on their balance sheet they work their way their way out of these losses they trade out of these losses by manipulating markets brazenly illegally obviously and there

>> if j.p. morgan fails who picks up the tab? >> if j.p. morgan fails i don't think anyone will pick up the tab because we have $290 billion of unsecured debt and i don't think there's any chance that we'll fail, but if we did, any losses the government should bear should go back and be charged to the bank just like fdic is charged backed to banks and j.p. morgan is going to spend $5 billion of fees to pay for the failure of other banks. i don't like the 5 billion, but it's appropriate that the american taxpayer should have to pay for that. >> i thought you were done, sorry. they should step in and bear the brunt of j.p. morgan's loss should you fail, right? >> the loss would mostly be borne by equity and unsecured debt. they might provide temporary funs to keep them in the short run. >> is it fair to say that j.p. morgan could be a loss of half a trillion or a trillion? & not unless the earth is hit by a moon. >> i want to go to the trades that brought you the 2 trillion. the $2 bill scombron 5 $5 bil

profitably for a few years out of j.p. morgan who do you put in there ken lewis. and i'm an old. you know so that's i mean there is a reason here that people are looking at the scale of the loss the money itself j.p. morgan can handle i mean it makes us raise some questions but they can handle that but then look at the issue of leadership into the future we are at the brink of a global economic crisis right now europe is in trouble china is in trouble if we're going to try to remove the head of a major bank let's think about who's going to do a better job and that's what's protecting them right now they're so much on certainty that who has the time for a job search. here that cleanest dirty shirt applies to bank c.e.o.'s as much as two currencies but coming up still ahead why don't we have more disclosure from anyway too big to fail banks or the mob we'll have more from my interview with capital from capitol hill heidi moore she'll answer that but first your closing market numbers. old. technology innovation all the latest developments around russia we've got the

the press has reported that j.p. morgan changed its model which allowed its london traders to take on more risk and then j.p. morgan changed its model again and then to top it off this change occurred in january which seemed to be material in nature, but was not included in its value at risk model. the sec has said that when a public company changes its model those changes must be disclosed. why exactly was the risk model changed? >> we have a hundred models and the intent is usually to make them better and constantly trying to be improved. back in june of the prior year. the cia- the cia and an independent model risk group was trying to update and improve a model. it was approved and implemented in january. as of april 13th, we had no reason to think it was a better model and didn't reflect the risk being taken there. clearly when things started going south, we felt that the new model was not better and went back with the new model and we went back with the 10q on may 10th. >> so it was changed on may 10th and there was an

so you know we were hoping the hearing of j.p. morgan c.e.o. went a little something like this ever twenty seven might be sixty three shows with a lot you know with all the organized crime and this is what i'm telling you what i'm exposing. for human rights and everybody this is mine. that was from the famous valachi hearings of the one nine hundred sixty s. which were touted as a major breakthrough in intelligence about the mob well that wasn't what we got with jamie diamond day you know what can i say a girl can dream that's not what we saw but first let's back up to quickly recap on how we got here. it's been a little more than a month since the beast revealed its true nature publicly at war with j.p. morgan's now infamous london whale weighing in with at least a two billion dollar loss. before disappearing back into the vast murky waters of the largest bank in the united states only to rear its head again in the form of p.r. spin so banks you can make loans or invest the money in securities you have a huge security put forward big bank in f

overseas competition, if j.p. morgan operates under a different rule than our foreign competitors we can no longer provide the best product and services to the foreign clients and that's why we're concerned about extra territoriality. if we compete we give our clients which include major u.s. companies better deals. they will go elsewhere if we can't give them the best possible deal no matter how much they like us. >> so you take that position despite the fact that the losses do not stay in london? >> yes. >> and you continue to lobby against for exemptions for the foreign trades. >> lobbying is a constitutional right and we have the right to have our voice heard. >> oh, well i'm not questioning your right to lobby. i'm questioning what's in the best interest the american public. while the public doesn't know the full detail of the trade, we crafted under title 7, and i think we all need to be just very, very clear about that, and i want to know whether or not you are aware of mr. gensler's testimony here today and what

j.p. morgan chase last month announced $2 billion in trading losses. j.p. morgan ceo jamie dimon testified at a senate banking committee hearing where he was met by protesters. its trading practices are being investigated. this hearing is two hours, 15 minutes. >> this guy should be going to prison. he is a corrupt. this man is a corrupt and he should go to jail. these men are predators on the american taxpayer money. they are job destroyers. this man is a crook. >> on behalf of chairman johnson of would like to call the meeting to order and then suspended until the chairman has arrived. i would ask the capitol police to restore order. >> this man is a criminal. [unintelligible] >> the hearing has been called to order. we are suspending until the capitol police restore order. this is the hearing in which we will ask people to cooperate so that we can conduct a serious inquiry into this matter. thank you. >> where is the chairman? >> you sold my house from underneath me. >> the people that were fo

can use that to the disadvantage of j.p. morgan. in fact, i think it's pretty well established that part of this open disclosure and discussion has allow the a lot of those and it's precipitated some of those losses, but -- so, it's not necessary for him to disclose proprietary information and if you read the articles you will see they're managing this and the independent people have said that, but the loss could be 6 billion, but that's just an estimate. it could be 2 billion, it could be -- some have estimated it could be less than that. >> thank you, mr. chairman. >> start the clock. >> and you'll be doing your quarterlies very shortly. the next question we can ask is profits for the quarter, but we'll wait on that one, too. >> there will be profits in the quarter. >> and that was the point i was trying to head toward that at least as an institution it's not happy, it's shareholders' money, but not devastating? >> not devastating. not fun, either. >> and this is actually more of an offshoot having read some of the senate testimon

j.p. morgan investment unit woke up every day trying to mitigate the risk from excess deposits invested between loans in bonds? >> that is a related area of inquiry at the occ. >> you are inquiring but you would not argue that case? >> not necessarily. >> i wouldn't think anyone would because you look up each day trying to make money for the bank. it is kind of a basic observation. small businesses across america and i will ask you to keep your smalls crescrisp - businesses are trying to get access to credit and they are frustrated. it is essential to the recovery of our economy. does it do damage to our economy to have banks diverting deposits into hedge fund investments instead of making loans to families and small businesses? >> we are very supportive of small business lending by the entire spectrum of national banks and federal thrifts that will supervise. >> that's not the question. is this damaging to our economy? >> i would hope not. i hope that was not the case. >> but it would be of depo

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.

j.p. morgan chase. . >> thank you. the chair wishes >> thank you. the chair wishes to remind our guests that the manifestation of approval or disapproval including the use of signs and placards is a violation which governs this committee and maintain order and decorum. our second panel is made up of one business of the ceo of j.p. morgan chase, mr. dimon. mr. dimon, you are recognized for five minutes and maybe if the cameras would take a picture and then exit. mr. dimon, you are recognized for five minutes. >> thank you, mr. chairman. chairman baucus, ranking member frank and members of the committee. i'm preparing to discuss recent losses in a portfolio held by j.p. morgan chase -- mr. chairman, can we get him to pull the mike closer. >> chief investment losses. these losses consider attention and while reviewing the facts i will do everything i can to the extent possible. j.p. morgan chase's six lines of business and provide a financial array of small and large businesses, governments and not

producing assets in order to pay off all of the losses that j.p. morgan goldman sachs merrill lynch lehman brothers a.i.g. made off m.f. global all of these losses are being paid off by us selling our income producing assets so welcome to the club jamie diamond. greece is a good example right they are paying off the austerity that's being artificially imposed upon them by selling all their income producing assets the lottery the shipping the infrastructure the roads the tunnels those are being sold off that's the income so you're selling the cows to buy milk it's a recipe for economic catastrophe and indentured servitude oh that's what they want speaking of intention servitude of course the queen is riding around town today going to tell you she doesn't perhaps have the heart to tell the people that it is the i.m.f. who is dictating policy i.m.f. calls on bank of england to cut rates the international monetary fund has called on the bank of england to cut interest rates and resume printing money to boost demand in the economy it has also asked the u.k. go

dips into cookie jar to offset london whale losses yes you know j.p. morgan lost all that money right there there we are in london do you see the london whale hopping through the background right munching on the plankton of fraud the krill of accounting miss leisure domain is right here with all the other big time financial crooks in london stacey this is where they break this is where they live then they're so happy with the fraud they're committed in the city of london that the olympic event for the summer for olympic pulling a using fraudulent polls as it should was fantastic well to remind people what happened with j.p. morgan is they made a giant huge bet on the corporate credit default swap market they cornered the market and they were the only guys there along everybody else took the other side against them they're attacking attacking attacking they're still attacking but j.p. morgan chase the company has sold an estimated twenty five billion dollars of profitable securities and an effort to prop up earnings after suffering trading losses tied to the b

credit but the point is that that was missed so risk can be hidden at all of these so ironic then j.p. morgan for example didn't fare the same fate as let's say big america or morgan stanley or citi group they seem to be in this little grouping at least according to moody's of what they're calling the middle ground the safe haven banks like they're still not as bad as the other guys over the that's the refugee tried to give j.p. morgan all along and then came along. to go along with that maybe that's true j.p. morgan is the biggest bank in the country in my view it has an implicit guarantee of the government because i think that if it was a real danger the government would have to step in if there was some kind of credit crisis that was instigated as a result so hey maybe j.p. morgan is a safe haven because at the end of the day it's got the biggest line to the government is it's the biggest bank that you could see perceive as too big to fail so in that way maybe it is. i are no further backwards here i was really now well let's continue so i've gotten to the last week we had our financial ch

i feel that j.p. morgan chase all the regulations will continue to serve our clients and that's what we're going to try to do. >> i was going to lead there with your answer to the first question. part of the reform of the reform that we may need in this area is what? the extraterritorial effect of some of the rules that we've had so far. we've done that in a bipartisan manner. you see at the same time what the previous panel coming out with chair proposed regulations, not regulations, but rules and guidance in certain areas. in the areas of coming up with various standards. coming up with two separate standards for swap and security base swap dealers. a, is that the appropriate manner that we should have purely guidance rules coming out where you don't do a cost benefit analysis before hand or should there be more of a close working relationship between the cfdc and the sec when issuing rules in this area? >> the cftc is a primary example where we should have one set of rules around derivatives and swaps. we

j.p. morgan chase -- mr. chairman, can we get him to pull the mike closer. >> chief investment losses. these losses have generated curveball attention. and while reviewing the facts i will do everything i can to the extent possible. j.p. morgan chase's six lines of business and provide a financial array of small and large businesses, governments and not for profits. >> these include deposit accounts and loans, credit cards, and mortgages and capital market's advice and mutual funds and other investments. let me start by explaining what the chief investment office does. like many banks, we have more deposits than loans. at quarter end, we held approximately $1.1 trillion in deposits and 700 billion in loans. cio along with the treasury unit invests excess cash that includes treasurys, agencies and mortgage-backed securities and corporate debt and other domestic and overseas assets. it also serves as an important vehicle for managing assets and liabilities of the consolidated company. in short, the

j.p. morgan's c.e.o. explains, doesn't defend, the bank's multi-billion dollar loss. >> susie: i'm susie gharib. we're half way through 2012; we'll look at the market outlook for the rest of the year. >> tom: then the housing market may still be weak but home renovations are making a comeback. what's driving the re-modeling and can it continue? >> susie: that and more tonight on "n.b.r." >> susie: it was an isolated incident and it won't happen again. that's what jamie dimon told lawmakers on capitol hill today about j.p. morgan's massive trading loss. he said the bank's traders got complacent, but added j.p. morgan would be solidly profitable in the second quarter. darren gersh reports. >> reporter: the high profile hearing began with protests. >> stop foreclosures now. stop foreclosures now. >> reporter: and then it turned to explanations and apologies. dimon blamed his bank's big trading losses on poor internal oversight and a switch to a new risk management model. >> this portfolio morphed into someth

global we're talking about j.p. morgan interesting lou they have the same auditor you see press wire house coopers . institution that audit firm is filled with j.p. morgan since the sixty's isn't necessarily complicity i think it's more complacency long long relationships very lucrative relationships level of comfort with people like jamie diamond who is a very you know savvy person over time i think the auditors become very complacent and they've missed something because they decided they're not going to look that much harder with somebody reassures them or tells them there's nothing they're similar to the regulators and are they held accountable because looking back to enron when you think enron you also think the accounting firm anderson that was very much why ound up and that you don't hear about the accounting firms anymore really or the auditing firms so sunroom i think the accounting firms of very very good neutral playing switzerland helping with these investigations they're probably working in the background talki

j.p. morgan is not.s a lrt as you know, earlier in the week in the new york times that loss related to the london wlal could approach some $9 billion. our own reporting from our own kate kelly, andrew say. it n a big way j.p. morgan is not. take a look at board right there. a big story. gains of 2.5 to 3% for most of the biggest banks in this country yet j.p. morgan on a day when stocks are having tremendously big day, that j.p. morgan isn't doing anything, pete. what does this say to you? >> for whatever reason it has some sort of leg. john, i know you want jump in, go ahead. >> i was going to say, judge, you just nailed it though. a doubling of losses by nyt story versus what kate kelly and sorkin reported. so who is right? i think sorkin and kate kelly are right. so if you have weakness you buy j.p. morgan. that's why it is weak. there is this fork in the head. if it is on the high end the stock should be lower. >> anthony, you want it comment? >> i was going to say, i think it is window selling. noth

dick may like j.p. morgan but is the smartest trade to avoid j.p. morgan now that it is in focus. and maybe washington wants you to plant trees? >> that's kipd of my poind. i clearly want them to make as much money as they can. >> and the financial spider. take a look at the underperforms. this is back to 2010. testifying before the senate. this is april 2010. down more than 40% compared to the 16% decline for the overall sector. perhaps the bottom is not in. dick said it was. karen what do you think? >> i hope it is. i like to think it is. i think sit is a different set f circumstances. it's not that the j.p. morgan thin thing. what i think will be the next catalyst of meaning here is the next earnings call and to hear what are the extent of the losses. what is the future of the cio? do they plan on raining in that desk? >> murphy, do you think this all goes away once j.p. morgan reports its quarter or thor if vefr makes it better? >> i think specifically right now you have to look at j.p. morgan. when you there is a big loss out there that jamie diamond did not touch on at all o

five full time regulators on site at j.p. morgan now the o.c.c. is reportedly looking at whether the company provided regulators with adequate information and they're considering whether or not they're going to claw back money paid to the traders and executives responsible for this trading loss but it's a story we've heard before we've heard all this from j.p. morgan to m.f. global and throughout the financial crisis of course too much risk taking hiding that risk expanding leverage too much complicit complicity and wrongdoing with too little oversight so what is going on is this i don't know the ford pinto phenomenon remember the car with the infamous exploding engine you see there crash test found it was faulty but the assembly line was already made and the company found it would cost them less to deal with the liability of settlements than to recall or to repair the cars so is that what we're seeing here with the management and traders at these firms not to mention those who audit them it's just a bigger payoff to go along with a

the press has reported j.p. morgan changed the model that allowed the london traders to take on more risk and then j.p. morgan chase's model again and to top it off, this change occurred in january which seemed to be material in nature but was not included in its value at risk model and the sec said when they change a model the changes must be disclosed. why exactly were the risk models changed? >> we have hundreds, maybe thousands of models. they're periodically changed, updated. the intent is usually to make them better. constantly trying to be approved. back in june of the prior year, cio and independent model risk grurp were trying to update and approve a model. it was approved. it was implemented in january. as of april 13th we had no reason to think it wasn't a better model and didn't better reflect 9 risks being taken there and clearly when things started to go south several weeks later we felt the new model was not better and back to the old model we thought was better. we disclosed that in the 10q. >> and was