there are no cmbs, no subprime, no off-balance sheet vehicles. we could have a great financial system. the american business machine is the best in the world. it is the best in the world. we are all blessed to have it. we should focus on getting it working again instead of constantly shooting each other all the time. >> i hope we'll do that. mr. chairman, thank you for calling the hearing. thank you for being here. >> senator menendez. >> thank you, mr. chairman. you know, i listen to this and i paraphrase shakespeare, a hedge or not a hedge, that's the real question. and it seems to me that you call these trades that lost anywhere between $2 billion and $4 billion economic hedges, a tempest in a teapot which i now understand you regret, and went on to say that it morphed but really, a hedge as i understand it doesn't create a loss without a corresponding gain. that's why you're hedging. and what seems to me that happened here is that you were pursuing a synthetic loan portfolio of selling cdss which in essence was a toxic instrument that caused

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

banks are stronger and boards are more engaged and there's no off-balance sheet vehicles and no more subprime mortgagees. the system is far healthier and you have to look at regulation in it's whole and not the one thing they might have missed. >> if one of the ceos in the industry does not know about the trades how can we expect the regulators to know about the trades and protect the taxpayer? >> i believe they'll kacapture everything. however, they can make it a better system by disseminating the kind of information by getting to the companies and they're critizing some of the things they're doing. i just think we need realistic expectations for regular laters. >> i would agree. but is it fair to say that a $2.3 trillion bank is too big to manage? too big to regulate and too big to control and too big to fail? >> no. we believe a bank should be bankruptable and that when the bank fails that the clawbacks should be invoked on management. the board should be fired. the company should be slowly dismantled. >> and who pays the losses. >> in a way that it doesn't cost the -- >> that's what i bel

no subprime mortgages, no exotic derivatives are going away. regulation has treated more capital, more liquidity. it is a much stronger system today. a lot has been accomplished. >> my time has ended. i yield back. >> mr. mchenry, 45 minutes. >> mr. dimon, there is discussion today distinguishing between hedging and proprietary trading. can you define to us the difference, in your view, a hedging verse proprietary trading? >> i will tell you what i think. a hedge is meant to protect you if something goes wrong in a decision you make. proprietary trading is making a bet that prices change and you can make money. the problem with that is that, every time we'd make a loan, it is proprietary. the riskiest thing we do is loans. they're all proprietary. if we lose loan -- lose money, that is the house account. we still make them. we try to risk management. i understand and never dispute the intent of the volcker rule. i like to make company safer. i think that -- it will be hard to legislate this. >> is there a distinction between hedging and proprie

far more rules and the boards are more engaged and there's no off-balance sheet vehicles and no more subprime mortgages. the system is far healthier and you have to look at regulation in its whole and not just the one thing they might have missed. >> if one of the best ceos in the industry doesn't know about these trades how can we expect the regulators to know about these trades and protect the american taxpayer? >> i think it would be an unrealistic expectation that they'll capture everything. some things get through their screen like some things get through our screen, however they can make a better system by disseminating the things that get through the markets and they're constantly criticizing some of the things we're doing. it makes us a better company. i just think we need realistic expectations for regulators. >> i would agree, but is it fair to say that a $2.3 trillion bank is too big to manage, too big to regulate, too big to control, too complex? are you too big to fail? >> no. we're not too big to fail. we believe a bank should be bankruptable, and that when a bank fails that the

a lot of things, no subprime. no sid. and we could have a great financial system. americans built this machine as best in the world. it is the best in the world. we are all blessed to have it. and we should focus and get it working again as opposed to constantly shooting each other. >> thank you for calling the hearing and thank you for being here. >> thank you mr. chairman. you know, i listen to this, and i paraphrase shakespeare, a hedge or not a hedge, that's the real question. and it seems to me that you call these trades that lost anywhere between $2 billion and $4 billion economic hedges, a temperature pist to the teapot which i now see that you said you regret. but really a hedge, as i understand it, doesn't create a loss without a corresponding gain. that's why you're hedging. and what seems to me that happens here is that you were pursuing a synthetic loan portfolio and selling c.d.s.'s, the crisis of 2008. and so really, you know, when you reduce a hedge or hedge a hedge, isn't that really gambling? >> i don't believe so, no. >> so this transaction that y

there is in off balance sheet vehicles, no more subprime mortgages. the system is far healthier and you have to look at regulation in its whole, want just the one thing that they might have missed. >> if one of the best ceos in the industry doesn't know about these trades, how can we expect the regulators to know about these trades and protect the american taxpayer? >> i think it would be unrealistic expectation that they'll catch everything. some things will get through the screen. however, they can make it a better system by disseminating that information to a lot of other companies. they audit us regularly and constantly criticize the things we're doing and it makes us a better company. i think we need realistic expectations for regulators. >> and i would agree. is it fair to say that a $2.3 trillion bank is too big to manage, too big to regulate, too big to control, just too complex. are you too big to fail? >> no, we're not too big to fail. we believe that a bank should be bank ruptable and when a bank fails the clawbacks be invoked on management

the market did a lot of things like i mentioned - - no subprime mortgages, regulation has created more capital, more liquidity. it is a much stronger system today. a lot has been accomplished. >> off my time has ended and i yield back. >> thank you. mr. mchenry? >> thank you, mr. chairman. mr. dimon, there is a distinction between hedging and proprietary trade. can you defined to was the difference of hedging versus proprietary trade? >> i will tell you what i think. a hedge is meant to protect you if something goes wrong in a decision you make your proprietary trading, i think make a bet that prices will change. the problem with that is that every time you make alone, it is proprietary. the riskiest thing we do is loans. they are all proprietary. if we lose money on them, that it is to the house account. we still make them. we tried to do the right thing and risk management. i understand and never disputed the intent of the the volcker rule. i can make companies a safer. i agree. we made it something complex that it will be hard to legislate or put in regular terms that worker >> is t

no vehicles or subprime mortgages or exotic vehicles. it is a much stronger system today. a lot has been accomplished. >> my time has ended and i yield back. >> thank you. mr. mchenry five minutes. >> before the next speaker takes to the microphone, we will take a quick break. dow, nasdaq, s&p all up better than 1%. yield on spanish bonds have dropped dramatically on news greece may have formed a coalition government by midday tomorrow. it's very important to understand how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an engineer, i have a career that speaks to that passion. thank you, mr. davies. that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking l

banks are stronger and boards are more engaged and there's no off-balance sheet vehicles and no more subprime mortgagees. the system is far healthier and you have to look at regulation in it's whole and not the one thing they might have missed. >> if one of the ceos in the industry does not know about the trades how can we expect the regulators to know about the trades and protect the taxpayer? >> i believe they'll kacapture everything. however, they can make it a better system by disseminating the kind of information by getting to the companies and they're critizing some of the things they're doing. i just think we need realistic expectations for regular laters. >> i would agree. but is it fair to say that a $2.3 trillion bank is too big to manage? too big to regulate and too big to control and too big to fail? >> no. we believe a bank should be bankruptable and that when the bank fails that the clawbacks should be invoked on management. the board should be fired. the company should be slowly dismantled. >> and who pays the losses. >> in a way that it doesn't cost the -- >> that's what i bel

banks are stronger and boards are more engaged and there's no off-balance sheet vehicles and no more subprime mortgagees. the system is far healthier and you have to look at regulation in it's whole and not the one thing they might have missed. >> if one of the ceos in the industry does not know about the trades how can we expect the regulators to know about the trades and protect the taxpayer? >> i believe they'll kacapture everything. however, they can make it a better system by disseminating the kind of information by getting to the companies and they're critizing some of the things they're doing. i just think we need realistic expectations for regular laters. >> i would agree. but is it fair to say that a $2.3 trillion bank is too big to manage? too big to regulate and too big to control and too big to fail? >> no. we believe a bank should be bankruptable and that when the bank fails that the clawbacks should be invoked on management. the board should be fired. the company should be slowly dismantled. >> and who pays the losses. >> in a way that it doesn't cost the -- >> that's what i bel

there is no the subprime or other vehicles. we could have a great financial system. the american business machine is the best in the world. we are all blessed to have it and we should focus on getting a work to get as opposed to shooting each other all the time. >> thank you for calling the hearing and thank you for being here. >> thank you, esther chairman. i list -- thank you, mr. chairman. to paraphrase the city -- to paraphrase shakespeare, to hedge or not to hedge. that is the question. you call these trades at lost anywhere between $2,000,000,000.4000000953 dollars economic hedges, a tempest in a teapot, which i understand you regret. but it does not create a loss without a corresponding gain, which is why you are hedging. what seems to me to have happened here is you are pursuing a synthetic loan portfolio selling credit default swaps which was a toxic instrument that cause the big part of our challenge in 2008. when you reduce a hedge or hedge a hedge, isn't that gambling? >> i don't think so. >> this transaction that you say more, what did it more than two?

subprime mortgages by now. i think we've learned to take what these rating agencies say with with less seriousness that was true. which isn't to say that they have no effect but i but i don't think that they have nearly the. power that they had a few years ago but you think they have contributed to worsening the crisis a little sure a little bit for example last summer. you'll remember that there was a somewhat artificial debt ceiling crisis in the u.s. and this led to a downgrading. of u.s. debts. for a pull a two to double i. that didn't do the crisis any favor that there were there were there were some temporary turbulence as a result of that i don't think in the long run. it did. serious damage but it was a but it was not. it was certainly not a positive step to ask you something if let's say two three men four years ago someone would have sat that you were already facing at crisis of the scale probably people would laugh in your face like no of course not do you think do you think scholars missed something or is it just that the world economy the model of the world economy is running low and it's out of battery and just unable to deliver growt

no, where will the money come from? >> the deficit -- the deficit of the country. all the countries are in a big de deficit. the deficit started after the subprime crisis in 2008. spain, 2007, 39% of deficit. and now it is at 90%. >> you are not answering the question. >> it's sinked ee eed linked t subprime crisis. is it true in >> where does the money come from? >> that's not the question. >> where does the money come from to keep greece in? >> the money will come from euro bonds, and i can tell you how to do it. >> the germans say no. >> the germans won't say no. >> one more question. >> two weeks ago i was in the federal chancellory. the other month i was visiting the president of the german bunders bank in frankfort. on not one occasion did any official, president or counselor or whoever he was ever say to me that germany did not want to become part of the solution of the eurozone crisis. "a," "b," so you're going to have to listen to this. secondly, are we serious or not? secondly -- secondly. >> i'm all ears. >> so what did they tell you? what did they tell you they were going to do? because i read "the financial times," too. and every st

no one remembers that. you saw it in the subprime crisis and you've seen it here again, too.t really pays to watch these bond markets because inflexion points, in periods of real turmoil, they'll tell you where they're going long before the equity markets will. >> that's a scary thought. scott, an excellent point. thank you for joining us today. >> thank you. >>> coming up, we've got this morning's top stories, including jamie dimon's date with the senate banking city and major garrett going to get behind the politics behind today's hearing and what the committee hopes to achieve. take a look at yesterday's winners and losers. our cloud is not soft and fluffy. our cloud is made of bedrock. concrete. and steel. our cloud is the smartest brains combating the latest security threats. it spans oceans, stretches continents. and is scalable as far as the mind can see. our cloud is the cloud other clouds look up to. welcome to the uppernet. verizon. >>> good morning and welcome back to >>> good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky qu

and more and more families had subprime loans and got blown out and now they have no savings, no investmentsthe home equity. they got hit very, very hard here. white families got hit hard, too, but less of their income is from home equity. >> so -- what's the answer? >> the thing is that money -- is how you grow wealth. you grow wealth by job and you about money. that's why this is so troubling. politically such a big, big problem for this country because you want people to advance. juan people to begin to grow wealth because out of that becomes investments and -- in a home and in education and in your standards of living. so -- the real issue here is trying to make sure people get jobs and can get savings and can start to build wealth instead of lose wealth. we are going to talk more about this in my weekend show. your bottom line, saturday, 9:30. go to cnn.com to read the analysis of this. it is an important story. >> it is an important story. thank you for helping us understand. >>> breaking news to pass along to you involving the u.s. supreme court. don't get too excited. the supreme cou

subprime lending crisis. today we had perhaps the nation's most powerful banking ceo take a browbeating from some democrats and heaps of praise from republicans. but there's no indication jp morgan or any other bank will end the derivatives trading and other risky gambles that could send us into another economic tailspin. wall street emerged from the financial crisis better than ever before. the same can't be said for people who lost their homes, their life savings and worse. get your cell phones out. i to know what you think. do you believe risky behavior by wall street will drive us into another financial crisis? text "a" for yes, "b" for no to 622639 or go to our blog at ed.msnbc.com. i'll bring you the results later in the show. joining me now, senator bernie sanders of vermont. senator, let's get right down to brass tax and knuckles. do you think anything good came from today's hearing, with the fawning celebratory rhetoric that emerged from the republicans on that committee? >> well, michael, i'm not on the committee, and i wasn't in the room, but from what i could hear, and what i read, it really was quite incredible. you have wall street which throug

tweets every morning. >> this is the conversation we need to have that no one is willing to have. >> in "reckless endangerment," the subprime lending collapse and home ownership. >> if you want to subsidize home ownership in this country, then put it on the balance sheet and make it clear and make it evident and make everybody aware of how much it is costing. when you deliver through these third party enterprises, and in may and freddie mac, when you deliver through a public company with -- through fannie mae and freddie mac, that is not a good way of subsidizing home ownership. we have seen the end of that movie. >> more sunday at 8:00 p.m. on c-span's "q & a." >> the georgetown university law center hosted a discussion on the 2010 health care law ruling. the court said the law is constitution based on the to levy taxes. this is one hour, 35 minutes. >> good morning and welcome. i am the editor and chief of health affairs. i have the privilege of moderating this distinguished panel today. in the words of admiral stockdale, who are we and why are we here? we are here because a momentous decision came down yesterday from the

subprime crisis. also you have to say -- >> where does the money come from that keeps greece in? >> the money will come from the europeans, from the euro bonds. >> the germans say no. >> this is very important. >> final and we'll go to another question. >> two weeks ago i was in the federal chancellory seeing the chancellor responsible for europe. i was visiting the president of the german bank in frankfurt. on not one -- prior to that i had been in the ministry finance in berlin. not one official, president, counselor did not say germany didn't want to become part of the solution, a, b. secondly, were you serious or not? >> second that. >> secondly, secondly -- >> what did they tell you? >> what did they tell you they were going to do because i was at the financial bank and every statement that has come out of berlin has been negative about euro bond and negative about using -- >> you want the answer? >> why do you think it is, niall, keep saying no and they are not prepared to do anything an extra 500 billion euro exposure has come on the balance sheet of the german bank because they agreed to it. >> that's not how it works. that's not how it works and you know