Market Overview

Will Congress Skewer JPMorgan's Jamie Dimon in Upcoming Hearing?

JPMorgan Chase's (NYSE: JPM) CEO Jamie Dimon has agreed to testify in a congressional hearing early this June to discuss his company's $2 Billion trading loss. Dimon revealed this loss in a conference call earlier this month.

One research analyst, who Benzinga agreed not to identify by name, tells Benzinga that Congress will try to make Dimon look “as bad as possible.” The analyst says Congress will achieve this by asking Dimon questions that he cannot or does not want to answer.

Dimon may be asked to explain exactly how JPMorgan Chase's $2 billion trading loss occurred. He may also be forced to defend his characterization of the trade as a hedging strategy.

The aforementioned analyst also claims to believe that the trade was initially intended as hedge, but may later have shifted away from the original intent. In addition, the analyst states that the loss could turn out to be larger than $2 billion, but has so many moving parts and so little disclosure that it is difficult to value at this time.

In a recent interview with Benzinga, William Hassiepen, Vice President and Co-Manager of Egan-Jones' ratings desk, says that Congress will face a “massive challenge” deciding if banks, like JPMorgan Chase, will be allowed to operate investment banks and commercial banks simultaneously.

In the past, Dimon has been an advocate of looser financial regulation, but whether he likes it or not, Congress may rebuke him in his hearing to offer evidence why the federal government might want to introduce stricter financial regulation that tightens reigns on large banks.

Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.

Posted-In: News Movers & Shakers Management General Best of Benzinga

 

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