By Erik Wasson - 05/13/12 03:15 PM EDT
Jamie Dimon, the CEO of JPMorgan Chase said on Sunday's “Meet the Press” that his bank's massive $2 billion lost bet, which was revealed last week, has given financial regulators more ammunition to tighten banking rules.
“Yes, absolutely,” he said. “This is a very unfortunate and inopportune time to have this kind of mistake.”
Sen. Carl Levin (D-Mich.), who has been leading the fight to create a strong Volcker rule, sounded confident he may now have the upper hand.
“The price will be they will lose their battle in Washington to weaken the rule,” he said, in an appearance the same program.
Levin warned that the Treasury department appears intent on allowing the kind of risky $100 billion bet that JPMorgan made, and that allowing rules to be watered down could risk another massive taxpayer funded bailout of the banking system that was needed during the 2008 financial crisis.
“We have to be very, very careful that the regulations are not undermined,” he said. The current draft Volcker rule, slated to be revised by this summer, allows federally insured depository banks to trade using their own funds in limited circumstances including to reduce risk by hedging.
Financial experts say JPMorgan's hedge was badly constructed and actually created risk for the bank, rather than offsetting existing risk. Levin said that the definition of hedging in the draft Volcker rule must be tightened to prevent hedges against entire portfolios instead of against individual investments.
He warned that a massive Wall Street lobbying effort is underway to keep the current definition.
Dimon in his appearance admitted that JPMorgan's credibility has been damaged with the revelations of the $2 billion loss.
“The mistake had been brewing for a while,” he said. "We know we were sloppy. We know we were stupid. We know there was bad judgment."
He argued that he supports 70 percent of the Dodd-Frank law, including the power of the government to “take down” a large bank.
That being said, Dimon showed his displeasure with Democrats.
“I would call myself a barely Democrat,” he said. “I have gotten distrubed at some of the Democrats anti-business behavior.”
Dimon said he cannot endorse President Obama but this is because he serves on the board of the New York Federal Reserve.
He said, however, that both Obama and former Massachusetts Gov. Mitt Romney, the presumptive GOP nominee, are "very qualified" to be president.
Dimon said the administration has not engaged in "true common collaboration” with the business community. He also blamed the administration for not embracing the Bowles-Simpson deficit plan and for not being able to avoid the debt-ceiling debacle of last year which caused business uncertainty.
Dimon also argued that many wealthy people would pay more in taxes as part of comprehensive debt deal.