i would like to conclude with a discussion of the voelker rule. some have said that it's not possible to distinguish between proprietary trading and hedging. clearly, that's what the voelker rule contemplates and it's what, if we implement it, is going to be imposed on banks like yours. could you discuss for a moment whether we can distinguish between proprietary trading and hedging and if so, how we make that distinction? >> i think it's going to be very hard to make a bright line distinction between proprietary trading and hedging, because you can look at almost anything we do and call it one or the other. every loan we make is proprietary. if we lose money, the firm loses money. if we buy treasury bonds and they lose money, we lose money. so i have a hard time distinguishing. i do understand the intent of the voelker rule but the intent is to reduce activities that can jeopardize and threaten a big financial company. i completely understand that. i think the devil is going to be in the detail in how these rules are written that allow the good o

we needed the voelker rule. well, some of us also may reflect well, i told you so, maybe we don't need institutions in america that are too big to fail, but unfortunately, mr. chairman, as you well know, dodd-frank has codified too big to fail. with the ability to designate systemically important financial institutions, we codified too big to fail into federal law, empowering the fdic to wind down these institutions and allowing them to borrow the fdic up to the book value of the institution from taxpayers, an amount that could be outstanding in the trillions of dollars again. we have codified too big to fail. mr. chairman, before we get too far down the dodd-frank road, it is time for this nation to reexamine this. in addition, i think we should be very careful about outlawing risk. without risk, we do not have a rate of return. without a rate of return, we do not have investment, we do not have jobs in an economy that 3 1/2 years after the president has taken office, still suffers and our constituents are stil

amount of your market value to your shareholders, and the irony to me is that if there was a good voelker rule in place, they may not have been able to do this because it clearly doesn't seem to be hedging customer risk for even the overall exposure of the bank's portfolio. >> i don't know what the voelker rule is. it hasn't been written yet. it's very complicated. it may very well have stopped parts of what this portfolio morphed into. >> so there is a possibility that could have avoided this situation? >> it's possible. i just don't know. >> thank you very much. >> senator? >> thank you, mr. chairman, for having this hearing and mr. dimon, for being here. i wish we had had these kinds of hearings prior to the passage of financial regulation and i think one of the good things that's come out of this is a lot of folks on this committee have really focused in on issues that are relevant and again, i think that part of this has been positive. mr. dimon, you mentioned the biggest risk a bank takes is making loans, is that correct? >> yes. >> that is the largest risk a bank -- and you have $7

the voelker rule a modest attempt to try to take some of the riskiest trading out of insured banks, backedxpayers of the us. bottled up with a full scale from the financial industry so sadly little as changed. >> the banks are bigger than they were before. >> they control 77% of the banking assets in this country, the big five have 95% of the over the counter derivatives, $305 trillion in over the counter derivatives. >> you gave a speech today in which you laid out your solution to this problem. you said what we have done isn't enough. what was your answer? >> this takes me a while to get here. because i went through a year and a half investigatory effort and now i have watched for a year as policy makers and a lot of good people tried to put new rules in place, and i see a financial industry that has learned nothing. they very spared by trillions of dollars, and they have changed not at all, and shown no willingness to change. and they even -- active effort to blame this on on some government housing project. i look at this today and see banks that are too big to fail, too big to manage

what's happening tom is rules are being written by regulators to specific things, one is the voelker rule and it's a great opportunity to understand the difference between a propriety trade which all america's agreed is not going happen in the financial institution and that of a hedge. >> tom: is there anything about the way you understand this trading strategy, anything about it that should be illlegal? >> what appears to have happen sunday over times they doubled down and tripled down it became a propriety trade and the question is, tom, how does a regulator know the difference. you know, are there some kind of measures that are put in place in the front end to gauge this because as it appears this thing morphed from one kind of a trade to another. >> tom: to the point of regulators in front of your committee last week in fact you had a regulator admitting his agency did not perform austin peay to expectations. are more rules as you're requiring more regulators and funding for the regulators? >> i think we ought to have some overall standards. i certainly think the best is capital

rule, but in practice isn't it difficult to use the voelker rule to stop the issue of jp morgan? >> well, we can say in this specific case we're still investigating it and i don't want to talk about the specific case, but in general, yes, differentiating proprietary trading from ledge jet mitt -- legitimate activities is difficult and regulators are looking at 19,000 comment letters and trying to figure out how to do that. one comment i might make is one requirement of the voelker rule there is be very expensive documentation, explanations the supervisors in advance, for complex hedges and auditing and appropriate incentives for the executives involved in the activities of the traders. so, at a minimum, if the roker rule was in place we would know more about the situation. >> the classroom theory i agree with it but isn't the silver lining there was no taxpayer loss here. jp morgan had the appropriate capital requirement to cover their loss, which is what you're talking about later. isn't the real issue here not thousands of new rules and 2,000 page bill but increasing the capita

they're veterans, retirees, mothers, and not just people like me, so that's why we think the voelkers have to be written carefully to maintain the best capital markets in the world and not stifle them. >> in six seconds how do you as an international organization hedge against political risk, what's happening in argentina, what's happening in europe, what's happening in other places? what do you have to do and what does it cost? >> some places we don't do that much business so obviously an easy solution and other places you have conversations with the board about if you are wrong about a country how much i might be willing to lose so we do investments in certain countries and we don't want any one thing to damage j.p. morgan if we're wrong about our view about that country. >> thank you. >> thank you. >> we'll be back to washington in just a moment. want to touch the markets here and stocks have been holding really at the highs of the day and led in part by financials and we can take a quick look and see how some of the biggest banks are trading and you see it there green across the b