Executives may have to pay for JPMorgan loss

JPMorgan Chase CEO Jamie Dimon told Congress on on Wednesday that senior bank executives responsible for a $2 billion trading loss will probably have some of their pay taken back by the company.

"It's likely that there will be clawbacks," Dimon told the Senate Banking Committee.

Under bank policy, Dimon said, stock and bonuses can be recovered from executives, even for exercising bad judgment. The policy has never been invoked, he said.

Dimon, under close questioning about his role in setting up the investment division of the bank responsible for the loss, declared: "We made a mistake. I'm absolutely responsible. The buck stops with me."

Dimon contended that the trading loss, disclosed on May 10 in a surprise conference call with reporters and banking analysts, were meant to hedge risk to the company and to protect in case "things got really bad."

The trading loss has heightened concerns that the biggest banks still pose risks to the US financial system, less than four years after the financial crisis in the fall of 2008.

Two Democrats on the committee, Sens. Charles Schumer of New York and Robert Menendez of New Jersey, expressed concern about what would have happened if the trading loss had occurred at a weaker bank.

JPMorgan Chase is the largest bank in the United States by assets and is considered among the strongest. Dimon often makes note of the bank's "fortress balance sheet."

But Menendez hypothesized about a larger loss, perhaps $50 billion, that creates a run on the bank "and that ultimately becomes the collective responsibility of each and every American."

Menendez also challenged Dimon on his strenuous opposition to stricter financial regulation and noted that JPMorgan received a $20 billion taxpayer bailout loan at the depths of the 2008 crisis.