In testimony to a U.S. Senate Committee on Banking, Housing and Urban Affairs, Dimon told lawmakers that the trading loss was a result of a strategy that, "was poorly conceived and vetted." Dimon added that when the unit's trading position soured, the bank's traders, "incorrectly concluded that those losses were the result of anomalous and temporary market movements, and therefore were likely to reverse themselves."
"In hindsight, CIO's traders did not have the requisite understanding of the risks they took," said Dimon, adding that the losses culminated from a strategy that went largely unknown to the firm's management and risk teams.
JPMorgan shares were little changed in Wednesday trading, gaining just under 1% to $34.52. The nation's largest banks shares are off over 13% since it disclosed its trading loss on May 10.
For Barclays, a June $451 million settlement with regulators in the U.S. and U.K. on its alleged manipulation of short-term interest rates led to the resignation of its chief executive Bob Diamond and his voluntary forfeiture of nearly $31 million in deferred stock bonuses."It is my hope that my decision to step down and today's agreement on my remuneration will help close this chapter and allow Barclays to move forward and prosper," said Diamond in the statement on Monday. According to regulators the U.S. Department of Justice, the Commodity Futures Trading Commission and Britain's Financial Services Authority, Barclays traders and employees responsible for determining the bank's short-term funding costs attempted to manipulate or falsely reported benchmark interest rates to bolster profits or minimize losses on derivatives trades. Starting in 2005 Barclays's manipulation "occurred regularly and was pervasive," said the CFTC, in announcing the late June fine, which was the biggest in its history. The FSA alleged in its fine that the bank may have violated so-called 'Chinese Walls' between its trading desks and treasury units to collude in manipulating lending rates on hundreds of occasions, and with other banks. Barclay's chief operating officer Jerry del Missier also resigned with Diamond and the bank's chairman Marcus Agius is expected to step down after finding a CEO and COO.
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