With cameras on and protestors in full voice, the Senate Banking Committee convened a session today to question JPM CEO Jamie Dimon on the trading losses that have reinvigorated the debate on Dodd-Frank implementation. With a few exceptions, the hearing was generally cordial as Mr. Dimon took responsibility for his bank’s losses. Few, if any, minds were changed, as Democrats continued to push for a strong Volcker Rule (see FSM Report PROPTRADE10) and Republicans raised capital standards as the “best, first line of defense” against systemic risk. Growing Congressional consensus on high capital will, FedFin notes, have considerable impact as U.S. regulators now turn to the tough Basel III proposals criticized at Tuesday’s FDIC meeting as still too lenient (see Client Report CAPITAL183). Corporate-governance reform and better risk management received broad bipartisan support, with the case highlighting board, risk-tolerance and related matters FedFin continues to view as significant supervisory questions sure to confront other large financial institutions. This report analyzes the policy implications of this hearing, which also focused in detail on the specifics of the JPM case.
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