(Bloomberg News) JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told U.S. House members that he complied with disclosure rules in warning investors about changes that contributed to the bank's trading loss of at least $2 billion.
"We disclosed what we knew when we knew it," Dimon told lawmakers today at a House Financial Services Committee hearing in Washington.
Dimon's comments came during his second appearance on Capitol Hill in less than a week to explain how the firm lost billions on derivatives trades. U.S. Securities and Exchange Commission Chairman Mary Schapiro, speaking at the same witness table earlier, said the agency has a "wide panoply" of penalties at its disposal in pursuing sanctions against JPMorgan. The bank could pay penalties if investigators find that it violated disclosure or other rules, she said.
Since Dimon announced the loss on May 10, investors and regulators have questioned how JPMorgan disclosed changes it made during the first quarter to its "value at risk" or VaR calculation. Dimon told investors on May 10 that the company used a new model, which later proved to be "inadequate" to calculate VaR some time during the first quarter.
He told lawmakers today the the model change didn't directly cause the loss.
"It may have aggravated what happened," he said. "I wouldn't say it was the cause of what happened."
Dimon has warned that the $2 billion loss could balloon as the bank unravels some of its questionable trades. He told lawmakers that he won't provide an update on the loss until the bank releases its second quarter earnings on July 13.
The heads of the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Securities and Exchange Commission and Commodity Futures Trading Commission and a senior Federal Reserve official made their first appearance earlier today before House lawmakers, who questioned how regulators could have missed the trading debacle.
"Just as JPMorgan should be and is being held accountable for its risk management failures, accountability must also be demanded of the federal regulators who oversee the bank's activities," said Representative Spencer Bachus, the Alabama Republican who chairs the House Financial Services Committee.