WASHINGTON — Two House Democrats called Tuesday for JPMorgan Chase & Co. (JPM) chief executive James Dimon, along with two figures who played a role in the bank's recent multi-billion-dollar trading losses, to testify before Congress.
Rep. Elijah Cummings, D-Md., the top Democrat on the House Oversight and Government Reform Committee, and Rep. Peter Welch, D-Vt., sought the hearing, as Democrats in Congress and Obama administration officials seize on JPMorgan's losses as they press for regulators to hold the line on the implementation of the Dodd-Frank financial overhaul law passed in 2010.
The losses "exemplify the risks that continue to threaten the stability of our financial system and highlight the critical importance of the Dodd-Frank legislation," the lawmakers wrote in a letter to Rep. Darrell Issa, R-Calif., the panel's chairman. A spokesman for Issa said he would review the Democrats' request.
In addition to Dimon, lawmakers said they would seek to call Bruno Iksil, the trader who contributed to the massive losses and whose large bets earned him the nickname "the London whale" and Ina Drew, the former head of the bank's Chief Investment Office.
Since the losses were disclosed earlier this month, Democrats on Capitol Hill have been focusing on the so-called Volcker Rule, which bars banks from trading with their own money. Many advocates of stricter financial regulations want to make sure that the rule, still in draft form, does not allow the kind of trades made by JPMorgan.
Critics point to the size and complexity of the trades as a sign that JPMorgan was seeking to generate profits rather than simply protecting its portfolio. The Democrats wrote in their letter that JPMorgan's initial description of the trades as hedges "raises serious questions" about their propriety. "We also need to understand the impact of this specific incident on the financial market and the prevalence of similar trades," they wrote.
Many, though not all, Republicans have diminished the importance of the losses. Speaking on ABC's "This Week" on Sunday, House Speaker John Boehner (R., Ohio), said, "there's no law against stupidity. No law against stupid trades."
Boehner said there wasn't "anything" in the 2010 financial overhaul law, which he wants to repeal, that would have prevented such activity at JPMorgan.
However, the authors of the Volcker provision in the financial overhaul law, Sens. Carl Levin, D-Mich., and Jeff Merkley, D-Ore., say they are optimistic that regulators working on the rule's final version won't include an exemption for investments that hedge against the risk of an entire portfolio of investments, rather than offsetting the risk of specific investments.
The Federal Reserve and other regulators are currently trying to hash out the arcane issue, but are now under a far more intense public spotlight due to the JPMorgan loss.