Volcker Rule

WASHINGTON -- The senators behind the Volcker Rule warned Friday that regulators implementing it have proposed a loophole that would have allowed JPMorgan Chase & Co.'s $2-billion trading loss. "That loophole should be closed," said Sen. Carl Levin (D-Mich.). Levin and Sen. Jeff Merkley (D-Ore.) wrote the provision in the 2010 financial reform law designed to limit trading by depositary banks for their own accounts. The Federal Reserve and other agencies are drafting the specific regulations covering that proprietary trading.

Another executive at JPMorgan Chase & Co. is expected to leave his post in the wake of the bank's multibillion-dollar trading loss, the Wall Street Journal reports. Barry Zubrow is expected to step aside as head of the bank's corporate and regulatory affairs by the end of the year, The Journal reported, citing anonymous sources. Zubrow had previously worked as JPMorgan's chief risk officer. As head of regulatory affairs, for example, Zubrow authored the bank's comment letter on the so-called Volcker Rule, a key part of the Dodd-Frank financial reform that, when implemented, would sharply restrict the extent to which banks could trade with their own funds.

NEW YORK -  JPMorgan Chase & Co.'s stunning $2-billion loss serves as a “wonderful poster boy for the Volcker rule,” a leading securities law expert said. “Banks that are too big to fail can't be allowed to lose their shirt,” Columbia Law School professor John Coffee told The Times.  “The Volcker rule faces overwhelming opposition in the financial community, but this is sort of a poster boy for just what can go wrong,” Coffee said. The Volcker rule, named for former Federal Reserve Chairman Paul Volcker, refers to a provision of the 2010 Dodd-Frank financial reform law that aims to curtail speculative trading by banks.

Former Citigroup honcho Sanford I. Weill is widely seen as the man most responsible for the rise of "too big to fail" banks and, by extension, for the enormous federal bailouts they received in 2008 and 2009. This week, however, Weill shocked the financial industry when he said that megabanks should be broken into smaller pieces, separating the arms that take federally insured deposits from the ones making bets on Wall Street. Lawmakers resisted such a straightforward approach when they enacted the Dodd-Frank law to re-regulate the financial industry in 2010.

It's a measure of how successful Wall Street has been at eviscerating the so-called Volcker Rule that in its current guise it would not have prevented JPMorgan Chase from making the derivatives trades that produced the stunning $2-billion trading loss disclosed this week. Even in its weakened loophole-ridden state, the rule, which prohibits banks from making risky trades for their own accounts, has been raked with gunfire from Jamie Dimon, the JPMorgan chairman who presided over that loss.

Regulators are confronting some 15,000 public letters attempting to influence the final shape of one of the most controversial elements of the 2010 financial reform bill. Five regulatory agencies have until July to complete a new rule that would ban proprietary trading at Wall Street firms, a move that some believe would make the U.S. financial system safer. The rule named after former Federal Reserve Chairman Paul Volcker would stop banks from using their own money to trade for profit rather than fulfilling a client's order.

Mandy Rice-Davies, an exotic dancer who played a peripheral role in the Profumo affair that rocked 1960s Britain — in which a Parliament minister was discovered sharing a mistress with an alleged Soviet spy — won her bit of fame by uttering perhaps the wisest riposte ever about the reflexive disavowals one hears from those caught doing wrong. Told that one of her high-placed lovers denied ever having met her, she replied, "Well, he would say that, wouldn't he?" Those words came back to me as I read the comments filed with federal regulators by bankers, investment big shots and high-priced lawyers pushing back against the so-called Volcker rule.

In a rational world, a corporate chairman who presided over a huge unexpected loss would be raked over the coals at his next shareholder meeting and his job would be up for grabs. It's not likely that will happen to JPMorgan Chase Chairman and Chief Executive Jamie Dimon at the firm's annual shareholder meeting today. Partly that's because "shareholder democracy" is a joke at almost all big companies. Dissident shareholders typically rejoice at getting a 40% backing for their proposals.

WASHINGTON — Jamie Dimon again proved himself Wall Street's able frontman in Washington, but his testimony on Capitol Hill may not head off tougher banking regulations following JPMorgan Chase & Co.'s risky trading losses. Dimon, JPMorgan's chairman and chief executive, appeared at ease with lawmakers as he fielded questions — some aggressive, but most deferential — at a Senate Banking Committee hearing Wednesday into the bank's trading losses of more than $2 billion. Although the hearing focused on how JPMorgan sustained the embarrassing loss, the two-hour session veered into larger debates over financial regulations.

Former Citigroup honcho Sanford I. Weill is widely seen as the man most responsible for the rise of "too big to fail" banks and, by extension, for the enormous federal bailouts they received in 2008 and 2009. This week, however, Weill shocked the financial industry when he said that megabanks should be broken into smaller pieces, separating the arms that take federally insured deposits from the ones making bets on Wall Street. Lawmakers resisted such a straightforward approach when they enacted the Dodd-Frank law to re-regulate the financial industry in 2010.

WASHINGTON - As JPMorgan Chase & Co. Chief Executive Jamie Dimon prepares for another day on the congressional hot seat this week, the U.S. Chamber of Commerce warned lawmakers and regulators not to overreact to the bank's huge trading loss. "Hiding money in a mattress isn't a strategy for a growing, prosperous, economy, but that seems to be the road some want us to go down," Thomas Quaadman, vice president of the U.S. Chamber's Center for Capital Markets Competitiveness, wrote on the business group's blog Monday.

WASHINGTON -- The "King of Wall Street" returns to Capitol Hill today, this time to explain how JPMorgan Chase & Co. sustained a $2-billion hole in its "fortress balance sheet. " Jamie Dimon, JPMorgan's chairman and chief executive officer, will face questions from the Senate Banking Committee on how the vaunted bank was stung by risky bets like those that bedeviled its Wall Street peers in the financial crisis. JPMorgan last month disclosed at least $2 billion in losses from risky derivatives trades.

WASHINGTON — Jamie Dimon again proved himself Wall Street's able frontman in Washington, but his testimony on Capitol Hill may not head off tougher banking regulations following JPMorgan Chase & Co.'s risky trading losses. Dimon, JPMorgan's chairman and chief executive, appeared at ease with lawmakers as he fielded questions — some aggressive, but most deferential — at a Senate Banking Committee hearing Wednesday into the bank's trading losses of more than $2 billion. Although the hearing focused on how JPMorgan sustained the embarrassing loss, the two-hour session veered into larger debates over financial regulations.

WASHINGTON — The top U.S. bank regulator had no inkling of JPMorgan Chase & Co.'s more than $2-billion trading loss until just weeks before it became public — even though the agency had 65 examiners working full-time at the firm's Manhattan headquarters and other company offices. To some lawmakers, the acknowledgment was another black mark for the Office of the Comptroller of the Currency, which has been criticized for not being more aggressive in its oversight of major financial institutions in the years before the financial crisis.

NEW YORK -- Paul Volcker swatted away a question about whether Jamie Dimon should step down from the New York Fed's board of directors. Some in Washington have called for Dimon, chairman and chief executive of JPMorgan Chase & Co., to step down from the board of the New York Federal Reserve.  Last month, JPMorgan disclosed at least $2 billion in losses from risky trading in complex derivatives. Critics have said Dimon should not be on the board of the regulatory body overseeing his bank.

WASHINGTON - Two key financial regulators told senators Tuesday that they learned of the huge trading loss at JPMorgan Chase & Co., through media reports and that the public wouldn't be protected from the fallout from future incidents until new rules are finalized to allow better monitoring of such trades. In the first of several congressional hearings to look at the loss, the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission gave some details about their investigations into the incident.

WASHINGTON - The $2-billion trading loss at JPMorgan Chase & Co. rekindled fears about the stunning risks still being taken on Wall Street, reviving demands for tougher financial rules and calls for the nation's biggest banks to be broken up. U.S. and British regulators said they were investigating the huge loss in a trading portfolio at JPMorgan. The bank saw its stock tumble 9% on Friday, the day after it disclosed that traders in New York and London had made misguided investments in complex derivatives in an effort to hedge against losses.

NEW YORK -- Paul Volcker swatted away a question about whether Jamie Dimon should step down from the New York Fed's board of directors. Some in Washington have called for Dimon, chairman and chief executive of JPMorgan Chase & Co., to step down from the board of the New York Federal Reserve.  Last month, JPMorgan disclosed at least $2 billion in losses from risky trading in complex derivatives. Critics have said Dimon should not be on the board of the regulatory body overseeing his bank.

In a rational world, a corporate chairman who presided over a huge unexpected loss would be raked over the coals at his next shareholder meeting and his job would be up for grabs. It's not likely that will happen to JPMorgan Chase Chairman and Chief Executive Jamie Dimon at the firm's annual shareholder meeting today. Partly that's because "shareholder democracy" is a joke at almost all big companies. Dissident shareholders typically rejoice at getting a 40% backing for their proposals.

WASHINGTON - The $2-billion trading loss at JPMorgan Chase & Co. rekindled fears about the stunning risks still being taken on Wall Street, reviving demands for tougher financial rules and calls for the nation's biggest banks to be broken up. U.S. and British regulators said they were investigating the huge loss in a trading portfolio at JPMorgan. The bank saw its stock tumble 9% on Friday, the day after it disclosed that traders in New York and London had made misguided investments in complex derivatives in an effort to hedge against losses.