The White House said Monday that the massive losses incurred by JPMorgan Chase highlighted the need to “fully implement” sweeping Wall Street reforms passed in 2010.
“This event only reinforces why it was so important to pass Wall Street reform, why it is so important to fully implement Wall Street reform,” White House spokesman Jay Carney said on board Air Force One.
Carney told reporters traveling to New York City with President Barack Obama on Monday that Washington can’t prevent “bad decisions being made on Wall Street.”
But he says government can protect taxpayers from taking the hit in the form of huge government bailouts. He notes that in this case, it’s the bank and its shareholders taking the hit.
JPMorgan Chase bank, one of the pillars of Wall Street, faced new scrutiny Saturday after it reported a shocking $2 billion derivatives loss that even its pugnacious chief executive called “egregious.”
“It ought to be a concern to the SEC. They are the ones who ought to have a concern about that,” said Senator Carl Levin, referring to the Securities and Exchange Commission, the government’s top financial regulator.
“The SEC should surely take a look at it.” added the Democratic lawmaker, who heads the Senate’s Permanent Subcommittee on Investigations.
JPMorgan CEO Jamie Dimon revealed the losses late Thursday in an unscheduled call to analysts, saying they were incurred in the last six weeks by the New York bank’s risk management unit, the Chief Investment Office.
They involved trading in credit default swaps usually meant to offset other risks in the bank’s investments, but Dimon said the strategy “morphed” into trading that was overly complex, poorly executed and badly overseen.
“These were egregious mistakes,” Dimon said. “They were self-inflicted and... this is not how we want to run a business.”