other than that, i concur with what secretary wolin said. >> senator shelby. >> thank you. i think it's kind of a given here from what i read and what i know, stress tests, jpmorgan went through and so forth that they have more than adequate capital. i've been told that they would have to sustain losses 40 times, in other words, $70, $80 billion and they'd still be standing. is that about right, governor tarullo? >> senator, in the stress test what we did with the trading book is to assume an instantaneous shock based on our very adverse scenario, which entailed trading losses of $128 billion. we also assumed over the period of the stress test credit losses of $56 billion, the sum of those gives approximately the number you indicated. >> comptroller curry, tell us, just walk us through, from what you know what was going on at jpmorgan. you know, were they managing risk, were they making money, were they doing a combination of what? everybody's got to measure risk, but in other words, what was really going on? you had people on site, right? >> correct. >> they took a positio

next, a portion of that hearing with deputy treasury secretary neal wolin. >> mr. curry, it is clear from your testimo.p. morgan lacked t appropriate such a large loss. what shoot bank have done differently?jt.p. morgan lacked appropriate such a large loss. what shoot bank have done differently?.p. morgan lacked t appropriate such a large loss. what shoot bank have done differently? >> in essence we believe that the issue at jpmorgan chase is one of inadequate risk management within the office of the chief investment office. we have been focusing on potential gaps or deviations from accepted standards of risk management within that particular office in looking to see whether similar gaps exist in any other area of jpmorgan's risk management architecture. >> mr. curry, the occ has dozens and dozens of examiners at jpmorgan. first did your agency check the risk management and internal controls of all aspects of the bank, including the chief investment office before this event, or did you miss this, and second, while regulators are not in the position to review every

wolin, and ask each of you, what does this mean, risk, mitigating hedging activities in connection with and related to individual or aggregated possession by the way, we all understand s or contracts. volcker's not in place today, so has no relevance whatsoever as it relates to what happened to jpmorgan, but what does that mean if an institution has tremendous exposure, does it or does it not have the opportunity once volcker's put in place to hedge against a downturn in economic activities or activities there that might be adverse to the bank. i would like for you all to tell me what this means and is portfolio hedging something you envision to be something that can happen or cannot happen after volcker is fully implementing. starting with you, neal. >> the right question to ask, is it related to individual positions, if you're hedging something related to that, then it's permi,

wolin. senator corker and i tried to put a rule in place of these living rulewills. as we move down that path, have you had the tools you need to evaluate these -- the back and forth on the creation of living wills and to what standard are you going to hold the institutions in a sense this living will will demonstrate how they would unwind themselves? are you looking at that in kind of a blue skies environment? are you looking at it in the potential real environment that we may have with a breakup of the euro? i would like to just get your comments on that. >> senator, the statute itself establishes a standard for evaluating the plans. and that standard is the bankruptcy code. and the requirement is that you have to make a judgment as to whether the plan could credibly result in an unwinding of the institutions with the standards of the bankruptcy code. and that's sort of the operating premise for the development of the resolution plans. as i indicated previously, the fed and the fdic issued a joint rule last year, establishing the criteria for the plans. we have bee

wolin, right now we face a serious challenge in europe with european banks who seem to be in a much more adverse condition than the united states banking industry based on capital and many other measures, as governor tarullo's testimony. to what extent did dodd-frank improve our banking situation, vis-a-vis the european? and put us in a stronger situation? >> senator, i think that both dodd-frank and the ability of the national oversight council to come together and discuss and understand these things, but also the work of the fed and other regulators sitting at this table to undergo the stress tests that have been at the core of making sure our banking system is well capitalized and well cushioned from the kinds of exposures that might have otherwise have been important aspects of our being in a much better position than we were before dodd-frank, and frankly in a much better position than our counterparts in europe. >> is that your view, governor tarullo? >> yes, senator. i think that beginning in 2008 and with the hearings that were conducted by this committee and your counterparts in

other than that, icon occur with what secretary wolin said. >> senator shelby? >> thank you. i think it's kind of a given here, from what i read and what i note, the stress test jp morgan went through and so fo h forth. i've been told that they would have to sustain losses 40 times -- in other words, 70, $80 billion to still be standing. is that right, governor tarullo? >> senator, in the stress test, what we did with the trading was to assume an instantaneous shock based on our very adverse scenario, which entail trading losses of $28 billion. we also assumed over the period of the stress test credit losses, the sum of those gives approximately the number you indicated. >> comptroller curry, tell us, walk us through from what you know what was going on at jp morgan. were they managing risks, making money, do a combination? everybody has to measure risk, but in other words what was really going on? you had people on site, right? >> that's correct. >> so, they took a position. was that a position to manage something they had already done or could you explain it to us? >> that'

. >> so in that spirit, since we are about, and i don't know if secretary wolin, how do you view that risk right now, as you are sitting here? i understand that the balance sheets here are in better shape than the balance sheets in europe, but the risk of collapse -- >> well, senator a couple off of things east and, first of all, european leaders tend to be moving with a sense of heightened urgency, and the run-up to the los cabos meetings will allow them to make further progress with respect to the banks and the restructuring of the banks and as you have seen, they are considering those things really on a now european-wide basis, and you know, the europeans have the will and they certainly have the capacity to keep this thing together. the president and the secretary and the treasury and others throughout the administration engaged and you know, i think that we will see as developments move forward it is not as useful for me to hazard a guess, but think they what is clear is that they have the will and the capacity, and i think that they understand more than ever the urgency to take

secretary wolin, if you'd like to talk about this at all. how do you view -- how do you view that risk right now? as you're sitting here? i understand that the balance sheets here, are in better shape here than in europe, but the risk of collapse there. >> well i think, senator a couple things. first i think european leaders appear to be moving with a little heightened sense of urgency. i think the run-up to the g-20 meetings in los kaup bowes will be an opportunity opportunity for them to make further progress with trop their bank, capital of banks, restructuring of their banks and as you've seen, they are considering those things really on a, now on a european-wide basis. you know, the europeans have the will and they certainly have the capacity to keep this thing together. the president, the secretary, the treasury, other of the administration are very much engaged and i think that we'll see as developments move forward. i think it's not useful for me to hazard a guess, but i think what's clear is they have the will, they have the capacit

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