Sen. Johnson leads banking hearing on JPMorgan lossesSIOUX FALLS (AP) — Sen. Tim Johnson is questioning why the largest bank in the U.S. failed to have more risk controls in place, leading to more than $2 billion lost on trades.
By: Dirk Lammers, The Associated Press
SIOUX FALLS (AP) — Sen. Tim Johnson is questioning why the largest bank in the U.S. failed to have more risk controls in place, leading to more than $2 billion lost on trades.
Johnson, chairman of the Senate Banking Committee, opened a congressional hearing in Washington on Wednesday in which lawmakers questioned JPMorgan Chase CEO Jamie Dimon.
"How can a bank take on 'far too much risk' if the point of the trades was to reduce risk in the first place?" the South Dakota Democrat asked in his opening statement. "Or was the goal really to make money?"
JPMorgan's trading loss has heightened concerns that the biggest banks still pose risks to the nation's financial system less than four years after the start of the 2008 financial crisis.
Dimon told the panel Wednesday that JPMorgan has taken steps to prevent such losses from occurring again.
Johnson said he disagrees with the notion that Wall Street reforms now micromanage the operations of a large bank and that regulators can't keep up with bank innovation.
"While risk cannot be eliminated from our economy, we can and must demand that banks take risk management seriously and maintain strong controls," Johnson said. "We must also demand that regulators do their job well."
Since the crisis, Dimon has been an outspoken voice against stricter financial regulation. He has complained that lawmakers and regulators have gone too far in overhauling the financial system and might be slowing the economic recovery.
The start of the hearing was delayed by shouting demonstrators, and at least a dozen people were escorted from the room.
Johnson said questions must be answered if the nation wants its largest banks to better manage their risks to maintain financial stability.
"A full accounting of these events will help this committee better understand the policy implications for a safer and stronger financial system going forward," he said.