A U.S. Senate panel probing the multibillion-dollar trading loss by JPMorgan Chase plans to unveil its findings at a hearing this year to press regulators to tighten the Volcker rule, according to three people briefed on the matter.
Bloomberg reports that staff members of the Permanent Subcommittee on Investigations, headed by Senator Carl Levin, have interviewed JPMorgan officials as well as examiners and supervisors at the institution’s regulator, the Office of the Comptroller of the Currency, said the people, who spoke on condition of anonymity because the inquiry isn’t public.
One focus of the queries is whether JPMorgan’s wrong-way bets on derivatives would have been permitted under regulators’initial draft of the Volcker ban on proprietary trading, the people said. The lender lost $5.8bn on the trades in the first six months of the year.
Levin of Michigan and Senator Jeff Merkley of Oregon, both Democrats, inserted the trading ban into the 2010 Dodd-Frank Act, leaving the details largely up to regulators. The senators have said that the JPMorgan loss highlights a loophole in the regulators’ draft that would allow banks to continue hedging their portfolio risks, and they said it should be closed.
Levin 'has pride of authorship in the Volcker rule and wants to make sure it’s implemented correctly', said Joseph Engelhard, senior vice president of Washington-based investment advisory firm Capital Alpha Partners LLC.
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