and as you just heard from mr. dimon himself, this was not a risk-reducing activity that they engaged in. this increased their risk, and so we've got to be very, very careful that the regulators here are not undermined by this huge effort to weaken the rule, by putting in a huge loophole, which is called portfolio hedging. >> i'll get into that in just a second. do you accept jamie dimon's accountability for this? you know, elizabeth warren, who was the chairwoman of the congressional oversight panel on t.a.r.p. has called for him to resign his post on the new york fed, while a lot of the regulatory regime is worked out. what do you say about that? >> i think the issue here is the power of the banks and whether or not we're going to regulate those banks and put a cop back on wall street. so i think this is a issue which is not involving personalities and should not involve personalities. so i don't get into that. the issue is whether we are going to stick with the law, as written, which will prevent us from bailing out b

in calling for mr. dimon to testify, i expect him to inform the committee of the details surrounding what has been reported to be a very complex trade. with today's hearing our june 6th bank supervision hearing with other key regulators and the treasury and the hearing with mr. dimon, the committee is on its way to having a more complete understanding of the facts that brought the j.p. morgan matter and will help us better oversee the implementation of wall street reform. this trading loss has been a wake-up call for many opponents of wall street reform and the need to fully fund the agencies responsible for overseeing the swap trades that appeared to be at the core of the firm's hedging strategy. it is my hope that all of my colleagues who expressed such alarm about this matter will now join democrats in educating full to address this very issue that some suddenly seem so concerned about. it is understandable that this high profile trading loss has caused me to renew the interest in wall street reform but as

mr. dimon's apology and we will explain how deep this crisis could go. shares of jpmorgan right now down about 8%, $37.49. one week down 10%. supporters of the volcker rule soundoff. barny frank saying without any help from the government jpmorgan has lost in this one set of transactions five times the amount they claimed financial regulation is costing them. wall street now fires back at the volcker rights. sue herera has a big interview on that one coming up when we check in with her in just a moment and this just in, breaking news right now, the s.e.c. says it is opening an investigation into jpmorgan's whale of a bad trade. mary thompson kicks off our coverage of that $2 billion mistake. mary. >> well, tyler, calling the trading loss is an egregious mistake born of sloppiness and weak oversight, on a call last night, jpmorgan ceo jamie dimon saying losses came from a trade put on by its chief investment officer aimed at protecting the bank from a credit event. >> in hindsight, the new strategy was flawed, complex, poorly reviewed, poorly executed and

do you think your messages are being heard by mr. dimon and others?out that 40% of the shares cashed were in favor of the resolution. that's an enormously high percentage in most shareholder votes and sends a strong message to the chase board of directors that there's a need for reforms. i'm actually optimistic that they will ask jamie not to be the chair. elect an independent. even though the motion -- the proposal failed in the majority. >> you feel that your -- your word is being heard by the people who matter, namely the people on the board. what else is of greatest concern to you right now about jpmorgan? its lending practices, its mortgage workouts, et cetera? >> my number one concern continues to be accountability. the foreclosure crisis and the problems in servicing are -- stem from a lack of accountability in the origination and the servicing and reo disposition. that's -- the company's lost $28 billion to date and has more than $8 billion of nonperforming loans on its books. you know, that's a much bigger challenge than the derivative loss.

here now is the rest of my conversation from earlier this week when i started by asking mr. dimon whether he thinks the american economy is better off now than it was four years ago. >> that's a really good question. could i give you historical context? america has the best economy in the world, best military, best universities, businesses are the envy of the rest of the world, i'm talking small, medium and large. wipdest and deepest most transparent markets and hard working entrepreneurial workforce. we were dealt a pretty good hand. the economy is getting stronger and very hard to measure versus four years ago. >> you have made the point that even if the economy is getting stronger, we could have been doing a lot better. how? >> let me go back a little bit because we had a crisis, we should acknowledge that. i think president bush and president obama took extraordinary measures the old fashioned american world. i think they stopped a system from getting dramatically worse. that's true. in the last two years, i can never prove this, the debt ceiling crisis and failure to do somet

mr. dimon has talked about this and really it's a mistake. it's a hedging tragedy that went wrong.ation is not a -- used as a sledgehammer for more regulation. >> but it will be. senator corker is already calling for hearings. you know what, he asked a really key question in his letter, if we can bring this up. question number two in this letter, were these bona fide hedging transactions, which presumably would be all right, that's not his wording, mine, or were these poorly managed trades? less acceptable. and what precisely is the distinction, sir? that's the problem. in the end, they still lost $2 billion. >> well, as you know, because we've talked about this on your shows before, a key issue now before the regulators, the s.e.c. and everybody else, is how are we going to draw this line between market making and proprietary trading and obviously this brings up another issue which is the bona fide hedge exemption? >> michael greenberg, what's your take on all of this? what is this an example of and what, if anything, should be done about that. >> well, as more evidence comes out,

let me play what david gregory asked mr. dimonview with them. >> we've had ordered legal risk compliance and the best people. we know we were sloppy. we know we were stupid. we know there was bad judgment. we don't know if any of that is true. they should look at something like this. we are totally open. they will come through. >> the regulators will come to their own could be cloogss but listening to what jamie dimon had to say. when you compare it to his concerns, the climate that he believes some democrats are presenting for business, but also, not being able to forcefully say that this was a mistake that regulation could have prevented, if you will. >> indeed. i think that's the gray area. the bank is maybe teenage that those positions that were put on were hedges. regulators are probably continuing to look at i as they were last week. that j.p. morgan chase may have exploited a loophole. they were done overseas at the london office if dodd frank had been enacted, would that get them around that particular regulation? that's w

we should expect to hear an invitation extended to mr. dimon some time after june 6. once again, jpmorgan's ceo, according to "the wall street journal," or actually according to chairman johnson will be invited to testify before the senate banking committee. bill, back to you. >> mary, thank you very much. mike mayo, what would you tell jamie dimon to say here? he won't exactly be among friends. >> or not say. >> well, i would say that the issue here is a crack in the business model. i mean, if you have this crack, what other cracks are there? the whole premise behind these big banks, behind the financial conglomerate model is you have a strong infrastructure that centralized and integrated. in the case of what just happened, that's not the case so fully at jpmorgan. the regulators probably missed this too. i can't imagine that this loss was any stress test done by the fed. >> well, you know, he needs to, perhaps as you did put things in perspective. the size of the loss relative to the size of their balance sheet, and let's face it, it's not illegal to lose money. wh

and i asked mr. dimonshe was a direct report of yours, what is your responsibility in all of this. he says of course the buck stops with me. i said well what questions could you have asked to maybe dig d p deeper into this problem or which questions did you wish you had asked? at that point he wasn't going to answer anymore questions. a lot of questions still remain not only about other companies having similar loss as bob mentioned, but the extent at jpmorgan. >> what i found interesting on your reporting yesterday was actually the shareholders are far more interested in the losses on the mortgage book. we have to leave it there, mary. thank you, bob. ty, over to you. >> let's switch gears and move to the bond markets for a moment. just 25 minutes before we hear the latest on the fed's thinking on the economy. the minutes come out. rick santelli joins us, not minutes from now but right now from the cme. rick. >> and those minutes could be important. think twist in any form of quantitative easing of course

. >> do you think that mr. dimon and some of the top executives should give back some of their salary then? >> the claw back provision is clear that if there's a substantial loss to the company that the pay of those executives who were responsible for making the decisions leading up to such losses should be given back to the company. we leave it to the board to decide who to hold account accountable. >> are you surprised he accepted the pay package voteed on today. $23 million? >> no, we're not surprised when people accept their own pay packages, which is why it's important for the board, spectacularally the competition committee comprised of outside independent board members, who look into this matter and to follow and adhere to their own claw back policy. >> susie: now we learn thad the fbi and the d.o.j. are investigating j.p. morgan. what do you expect they're going to find? >> that, i leave up to the regulators and the investigators. from my perspective on behalf of the 700,000 pensioners ultimately the taxpayer

the "wall street journal" reports this morning the bank is not expected to strip mr. dimon of his role as chairman. still the botched trading strategy, which was meant to protect the bank against losses, is opening the door to calls for tighter regulation on wall street. president obama says it is a perfect example of why he's pushing for more oversight. >> jpmorgan is one of the best-managed banks there is? jamie dimon, the head of it is one of the smartest bankers we've got and they still lost $2 billion and counting, precisely because they were making bets in these derivative markets. we don't know all the details yet, it will be investigating. but this is why we passed wall street reform. >> elizabeth warren, who helped establish the consumer financial protection bureau is seizing on this issue and her bid for senate in massachusetts. the former harvard professor told rachel maddow last night the debacle at jpmorgan suggests that the big banks haven't learned their lesson from twoi 8. >> jamie dimon's own words were that this was stupid, this was sloppy, so stupid and s

the idea that the gentleman, in this case, mr. dimon, who is head of the largest bank of the united states of america sits on the board, the regional, federal, new york board that regulates banks in that area is totally absurd. as you've indicated, six out of the nine members of the board are appointed by the banking industry, and that also makes no sense at all. so we've got to end the obvious conflicts of interest. we have to get people who are e beholden to the financial institutions off the regional set, and that's what i would suggest. >> what are your political prospects with this? >> i'll tell you the truth. i think if you ask the american people, do you think you should have bankers on the board that regulates the banking industry, i suspect 90% of the people would say, are you crazy? of course, you shouldn't. on the other hand, wall street is enormously powerful and we'll see how well we'll do. i think the key points here, dylan, is that three years -- four years ago, wall street drove this country into a horrendous recession t

mr. dimon's reaction to his company's much maligned $2 million loss right here on the "closing bell." meanwhile, the president is in reno, nevada, touting mortgage refinancing for, quote, responsible homeowners. >> obama using as an example may not be so responsible. what is this all about, diana? >> they have used the word responsible and administration owe figs officials have as well. well, they told us that this family, the keller family of reno, nevada, had a $168,000 mortgage but their homes that depreciated to $100,000 because homes have dropped 50% since the peak of the housing collapse. the president is touting an extension and making that program even larger. now, the trouble we had is when we listened to those facts, they told us that the kellers bought their home 14 years ago. that didn't ring right. because 14 years ago, home prices were far lower. and, in fact, we did confirm from county documents and then from the white house that the kellers, in fact, bought their home in 1998 for $127,000 with $127,000 mortgage. how do they now have a $168,000 mortgage? because they di

so it seems like the shareholders were behind mr. dimon. you explain, paul, why the heck the fbi is involved? >> i'll tell you something, i bring a lot of skepticism to these reports. by the way, all of the wire services, all of the major newspapers, networks are all reports this, but they're using the words that they're looking into this will. and when i last checked, it's not a crime to lose money. if you're a bank in america. so i don't know what crime they're investigating. they may be investigate something obscure reporting requirement, but until we hear there's an open grand jury, i bring a lot of skepticism to the idea that there is a criminal probe going on. >> is it a case of now you have the department of justice, sec, everybody has to look at it? >> that's a different matter. the se krft and dealt of justice have civil arms, as well, where they may be looking to see if shareholders were defrauded or lost their money in an improper way. that's very, very different, though, from a criminal probe. a civil suit would not surprise me.

senator tim johnson says he wants to hear from wall street regulators first and then he's going to ask mr. dimonorgan, if or when jamie dimon is invited, he will appear before the committee. saying, as always, we will continue to be open and transparent with our regulators and congress. >>> well, mary kennedy, the estranged wife of robert kennedy jr. died after hanging herself. this is according to a medical examiner's report released today. her body was found yesterday in an outhouse -- out building on the family's property outside new york city in a town called bedford. mary married rfk jr. in 1994. he filed for divorce two years ago. he had struggled with prescription drug and alcohol abuse. her family put a statement out late today requesting that the media give them some more space and stop with unneeded speculation. obviously the country is fascinated by the story. the couple had four children. they were not present when she was found. >>> well, we have some good news on housing today. foreclosure filings for april fell to the lowest level since july of 2007. that's really important becaus

it didn't violate the rule but mr. dimonr in saying it wouldn't violate the volcker rule. it depends on the nature of the trade and the nature of the rule. this is going to be an argument for tighter rule. he said, just because we are stupid, jamie dimon isn't stupid. he is a very able guy with a very well-run bank. that's precisely the point. when one of the best run-ins stugss presided over by very intelligent people can make a mistake of this sort, that's a sign of why you need regulation. that's a sign of why you need a safety net. i think this is an argument for the volcker rule. >> some would say, can you regulate greed combined with stupidity? >> yes. you can regulate in this sense. you can, in the first place say, we don't want you to get so over your head that you are not going to be able to pay what you owe other people. the old story is, if somebody owes you -- if you owe somebody $1,000, he can tell you what to do. if you owe him $100 million, he has to worry about you. we do have rules that say we don't want you

this i career people who have been taken far greater risks particularly with depositor money than mr. dimonas. i think what's salient here is whether or not they violated the spirit of the financial market reform. i think we have to look deeply into their trading operations. banks and brokers should be split up. but jamie dimon doesn't seem to me to be the culprit he's being made out to be here. >> let me talk about what happened before -- before financial reform. big rigging schemes, undisclosed payments to commissioners. i mean, the list is simply remarkable. >> mm-hmm. >> and this is a man who's never been a trader. never run -- been a front line manager for a trading operation. sitting on top of a $71 trillion derivatives book. >> well, we will leave it there. in fact, i think that he's known for having real, you know, close information and knowing what goes on in that trading desk of course this last incident flies in the face of all of that. but gentlemen, thank you. we'll continue the discussion. appreciate your time. be sure to tune in on monday. we will talk exclusively to two indu

. >> mr. dimon wanted a version of the volcker rule that frankly wouldn't do very much.now have a stronger argument for a volcker rule that says no to a bank. your main job is lending and managing the money of your clients. you should not put your own money at risk. >> the jpmorgan mess is also reminding voters how wall street nearly sent us into a depression four years ago and it gives president obama no doubt an opportunity to do something about it in this election year. but a recent poll should make the president take notice. in five potential swing states, large majorities agree with the statement "president obama has not done enough to hold the banks accountable for their role in the housing collapse." the collapse of the housing market and wall street's meltdown four years ago is still very much in the forefront of people's minds in this country. president obama should be out there, front on this issue, no doubt. especially since mitt romney still doesn't get it. here's what romney said today about jpmorgan. >> i would not rush to pass new legislation or new regula

. >> i think something that's always been admired at least by many of us is how plain spoken mr. dimonevery conference calls as you well know, he is in charge of every fact. along with that well known jous spokenness is his regard for the ability to manage risk and know everything that is going on at that company. this is not some lawyer that we're talking about who's running a big bank. this the jamie dimon always regarded as the finest of ceos offense our big banks. i watched him. i spent plenty of time with him going through every risk position. i've seen him do it at the bank. so the idea that this got away from them a bit and he said it so many times in only the way he could say it, of course, but that a trade got away from them, that the risk they were taken on perhaps and the strategy pursuing with this trading got away from him is really surprising. there's no other way around it. and we'll see what the impact is oin the stock market. certainly a dent to his credibility overall and has got to be a dent to confidence overall when you watch the biggest, best run bank out there ta

here's carl levin. >> mr. dimonat the activities which occur outside of the united states should not be subject to dodd/frank or to the volcker rule. this was a lond activity. but, boy, that's a huge loophole as well. so he's fighting for two or three loopholes and just this little bit of language. and we hope that the regulators will not give him any of the ones he's fighting for, because it would undermine the very purpose of dodd/frank. >> senator eleven also criticized republican presidential nominee, mitt romney, who has called for the repeal of dodd/frank. romney said today he favors instead common sense regulation. but carl levin said dodd frank is the only common sense regulation now on the books, and it's urgently needed so americans don't have to bail out banks one more time. >> we don't ever want to bail out banks again. we never should have to bail out banks again. but if they get away with this kind of bet, we're going to be right back in the soup again. we're going to end up either facing economic disa

but again, when mr. dimon the initial $2 billion in losses on thursday evening, he remarked that a couple thing. first, this was going to be volatile. the bank was not going to sell out of any positions at a big loss because they were going on hold on to it, waiting for the market to move in favor of them before taking those losses. and keep in mine, the book that contains this trade is marked every night. its value will change on a daily basis. and again, people in the market know that jpmorgan has these positions out there. they're gunning for it right now. you could see some volatility which is what the bank had indicated before. the question, the parlor game on wall street continues to be just how big these losses could grow after the $2 billion. the bank is saying last week that they could grow by more than a billion. >> is there any sense that there is worry regarding these two investigations that are ongoing? >> i think there is always worry any time you have the regulators at least from the bank's pers