OVERNIGHT MONEY: Jamie Dimon in the Senate's hot seat

WEDNESDAY'S BIG STORY: 

Under pressure: The headliner for the week, JPMorgan Chase Chief Executive Jamie Dimon. will testify Wednesday before the Senate Banking Committee. 

Ever since the nation's largest bank announced it had lost billions on a bet on corporate debt gone wrong, Dimon's institution has been thrust into the spotlight.

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According to prepared testimony, Dimon will apologize for the losses but also assure lawmakers they came from an "isolated event," where a trader failed to comprehend the risk he was taking on in a complicated move actually intended to reduce risk on a particular portfolio. 

Nonetheless, he will promise a thorough review of what went wrong, even as he points out that taxpayers will not be on the hook.

"We will not make light of these losses, but they should be put into perspective," he will say according to prepared testimony.

"We will lose some of our shareholders’ money — and for that, we feel terrible — but no client, customer or taxpayer money was impacted by this incident."

While the bank and the financial system are not believed to be in danger due to the loss, the echoes of the errors of the last financial crisis are unmistakeable, and have set off a fresh fight over financial regulation. 

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Members of the banking panel have already probed regulators in two separate hearings on how the bad trade could have occurred, who knew what when, and whether new regulations could have prevented it. 

Now it's Dimon's turn. 

While lawmakers will surely be probing for details on how the trade came to be, Dimon will also be pressed by members, well aware of his vocal critiques of the Dodd-Frank financial reform law, who want to use the losses to bolster their case for stricter regulations of the financial sector. 

Some members, such as Sen. Sherrod Brown (D-Ohio), even believe the trades prove the argument that banks of that size and complexity are simply too big to be managed and should be broken up. 

Meanwhile, several Republicans have said specific regulations are not the answer, preferring heightened capital requirements at banks to ensure there is enough of a cushion to keep them afloat when mistakes happen. In the midst of all these competing agendas will be Dimon, who will be trying to balance remorse over the losses with counterarguments to claims that Wall Street needs to be watched more closely.

Oh, and he'll have to do it all over again one week later, in front of the House Financial Services Committee.


WHAT ELSE TO WATCH FOR 

Farm bill plows forward, sort of: The Senate continues consideration Tuesday as lawmakers try to hammer out an agreement on more than 100 amendments. 

A slew of environmental amendments have cropped up including some that divide Democrats, such as one stopping the Environmental Protection Agency from implementing power plant regulations.

Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) and ranking member Pat Roberts (R-Kan.) were unable to reach an agreement on an amendment package late Tuesday, and the Senate will instead hold symbolic votes on Wednesday on two matters — food stamps and the U.S. sugar quota.

Majority Leader Harry Reid (D-Nev.) had tried to bring forward a package of six amendments including a conservative motion to recommit the farm bill over its level of spending. His move was blocked by Sen. Rand Paul (R-Ky.), who is demanding a vote on defunding aid to Pakistan.

Reid said the farm bill is not the place for the Pakistan matter and urged Paul to work with him on pressuring Pakistan through other bills.

Roberts and Stabenow said they would continue trying to find an "global agreement" on amendments. 

Sen. John Thune (R-S.D.) told reporters Tuesday that he hoped a deal would be struck on the amendments, even as he said that GOP lawmakers had germane amendments and that historically the Senate allowed non-germane ones as well.

"Obviously, we’re not going to be able to probably get 200 amendments," he said. “So hopefully we’ll be able to whittle that down.”

The South Dakota Republican, a member of GOP leadership, also said that the Senate needed to move quickly.

“I think it’s important that we try and move it across the floor in the next week or two,” he said.

Strategy time: Treasury Secretary Timothy Geithner will outline U.S. approach to the Group of 20 scheduled for June 18-19 in Mexico, at an appearance and the Council on Foreign Relations. During the summit, President Obama and Russian President Vladimir Putin are expected to meet for the first time since Putin took office.


LOOSE CHANGE

Europe at your mailbox: Postmaster General Patrick Donahoe said Tuesday that his agency would "look like Greece" unless Congress gives it more power to cut costs, Bloomberg reports.

Donahoe had urged lawmakers to finish their work on postal reform last month, but House Republicans have said they would try to bring their bill to the floor between July 4 and the August recess.

The Senate has already passed a bill, which will likely need to be reconciled with whatever the House passes.

The Postal Service, which is looking to cut $22.5 billion from its annual ledger by 2016, has urged Congress to let it move quickly to get rid of Saturday delivery and to ease a mandate forcing USPS to prepay retiree healthcare costs.

Take that, Lindsey Graham: Grover Norquist’s Americans for Tax Reform circulated a release on Tuesday asserting that the deficit deals crafted under former Presidents Reagan and George H.W. Bush didn’t work — that, while the tax increases were implemented, spending restraint was not.

The release comes after some Republicans have been saying they don’t feel bound by the pledge anymore. Sen. Lindsey Graham (R-S.C.), a defense hawk trying to avoid the upcoming sequester, said in an ABC News interview released Tuesday that he had “crossed a Rubicon” on that issue.


ECONOMIC INDICATORS 

MBA Mortgage Index: The Mortgage Bankers Association releases its weekly report on mortgage application volume. 

Business Inventories: The Department of Commerce report for April includes sales and inventory statistics from all three stages of the manufacturing process — manufacturing, wholesale and retail.

Producer Price Index (PPI): The Labor Department will release its May report that tracks the prices of goods at the wholesale level. The market tracks PPI closely because it represents prices for goods that are ready for sale to consumers.  

Retail Sales: The Commerce Department will release its May report that measures the total receipts of retail stores. The changes in retail sales are widely followed as the most timely indicator of broad consumer spending patterns, which represent 70 of economic activity. 


WHAT YOU MIGHT HAVE MISSED

— Senate Republicans urge closer look at Russia's practices before normalizing trade relations

— Baucus to pair Russian trade bill with Magnitsky human rights measure

Architects warn budget cuts risk deterioration of Capitol building

— Senate advances bill funding Dodd-Frank financial reforms

— Dems, GOP battle over healthcare law as 2013 spending bill advances

— Baucus: Some temporary tax provisions could get axed

— DeMint introduces farm bill amendment repealing Dodd-Frank

Business groups ask senators to overturn NLRB’s ‘micro-union’ decision

— IMF head warns global economy faces 'triple crisis'

— Wall Street's Buffett, Blankfein predict 'tough' economic times ahead of election

— Small-business index ticks down


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