By Peter Schroeder - 06/19/12 06:14 PM EDT
If JPMorgan Chase chief executive Jamie Dimon got the kid-gloves treatment in the Senate, the boxing gloves were out in the House Tuesday.
The head of the nation's largest bank found himself on the defensive from members of both parties as lawmakers probed and pressed the outspoken banker on how his firm managed to lose billions in a complex bet on corporate debt. The two sides often spoke over and interrupted each other in a hearing that occasionally turned heated — a stark difference from the oftentimes deferential treatment Dimon received from the Senate Banking Committee one week ago.
The hearing at the House Financial Services Committee began in a testy spirit. Rep. Stephen Lynch (D-Mass.) asked that Dimon be sworn in, and Chairman Spencer Bachus (R-Ala.) refused, saying the panel's standard protocol did not require it.
Ranking member Rep. Barney Frank (D-Mass.) told Dimon he was "disappointed" when the vocal critic of the Dodd-Frank financial reform law refused to say how much money a financial regulator should need to do their job.
"You're informed about all other aspects of what the federal government does and doesn't do," Frank jabbed.
He even went so far as to press Dimon on whether his own paycheck was in jeopardy due to the trading gaffe. Dimon said last week he expected some executives responsible for the trade would suffer compensation "clawbacks" due to the error. In response to Frank, Dimon said he had no control over his pay, and that the board that sets it "will do what they think is appropriate. I can't tell."
Rep. Maxine Waters (D-Calif.) effectively accused Dimon of being duplicitous when he said before the Senate that he supported large parts of Dodd-Frank, even as his bank pressed regulators working to implement the law to ease its requirements.
Dimon bristled. "Lobbying is a constitutional right, and we have a right to have our voice," he said.
"I'm not questioning your right to lobbying," Waters responded. "I'm questioning what's in the best interest of the American public."
Rep. Gary Ackerman (D-N.Y.) accused JPMorgan of "throwing darts" in what it claimed was efforts to hedge risk.
"I don't see how that creates one job in America," he said.
But it was not only Democrats engaged in feisty exchanges with the Wall Street giant, as multiple Republicans sought to use Dimon to advance their argument that the Dodd-Frank financial reform law fails to end "too big to fail."
Rep. Sean Duffy (R-Wis.) went back and forth on whether JPMorgan still poses a threat to taxpayers if it were to collapse. The bank's current losses are not expected to threaten the bank or even cause it to pose a loss this quarter, but Duffy pressed on over whether it was possible that some day JPMorgan could lose half a trillion dollars, putting the bank in jeopardy and potentially taxpayers on the hook.
Dimon maintained his bank would never need a taxpayer bailout, even if it were to collapse, and said the only way it would post losses that large is if "the earth is hit by the moon."
Later, Rep. Patrick McHenry (R-N.C.) asked Dimon if he supported Dodd-Frank, wondering if he had "buyer's remorse" on the law.
"That's a hard one to say," responded Dimon.
However, not all members were eager to make life difficult for the banker. Rep. Don Manzullo (R-Ill.) opened Dimon's questioning by asking for his insight into the European debt crisis, and Rep. David Scott (D-Ga.) opened his questions by hailing the bank's work on foreclosures in his state before asking him how he thought the bank should be regulated.
Bachus opened the hearing by saying JPMorgan's losses showed the system working properly.
"This is how the system is supposed to work," he said. "Those who took the risk are the ones who suffered the loss."
And Dimon himself remained resolute in his criticisms of Dodd-Frank, warning that onerous regulations would damage America's capital markets and drive financial business overseas. He also held firm in his defense of the bank's actions beyond its eye-popping loss.
"We don't gamble. We do make mistakes," he said. "The main mission of this company is to serve clients."
Before Dimon testified, committee members heard from a group of regulators charged with overseeing the bank who said they were still getting to the bottom of the losses. Mary Schapiro, chairwoman of the Securities and Exchange Commission, said the agency was investigating whether JPMorgan properly disclosed a change to its risk models that helped drive the losses from its London office.
"Part of what we're investigating is the extent of that disclosure, and whether it was adequate, among other things," she said.