JPMorgan Chase CEO tells Congress traders didn’t understand risks

JPMorgan Chase CEO Jamie Dimon is scheduled to tell Congress on Wednesday that the bank’s massive loss can be blamed on insufficient risk controls and a failure by traders to understand the risks they were placing. Dimon’s prepared testimony, supplied by the bank, indicated Dimon will sound a note of contrition before members of the Senate Banking Committee. “We have let a lot of people down,” Dimon will say, “and we are sorry for it.”

In May, JPMorgan announced it had suffered a multi-billion dollar loss on trades built around contracts tied to corporate bonds that were originally intended to hedge the bank’s exposure. Dimon’s opening statement will provide a brief sketch of what the company now believes went wrong, starting with a trading strategy within the firm’s chief investment office that was “not carefully analyzed.” Some of the blame is expected to fall on the traders themselves, who Dimon now says “did not have the requisite understanding of the risks they took.” Next week, Dimon will return to Capitol Hill to answer questions from members of the House of Representatives.