US legislators have heavily criticised Jamie Dimon, chief executive of the Wall Street bank JPMorgan Chase, after hearings opened on the bank's losses on derivatives trade and the need for tougher controls on major banks.
Tim Johnson, senate banking committee chairman, asked "where were the risk controls?" at "a bank renowned for its risk management" as the inquiry into the $2bn or more loss by the bank opened on Wednesday.
"So what went wrong?" Johnson asked, noting that the hearing is being held on the two-month anniversary of Dimon downplaying reports of the loss as a "tempest in a teapot".
"We later learned, however, it was an out-of-control trading strategy with little to no risk controls that cost the company billions of dollars," Johnson said.
Dimon pre-empted the hearings by releasing his own statement late on Tuesday that sought to downplay the implications of the losses, for the bank's finances and for banking regulators.
"All of our lines of business remain profitable and continue to serve consumers and businesses," Dimon said in prepared testimony, adding: "While there are still two weeks left in our second quarter, we expect our quarter to be solidly profitable".
Dimon admitted the trading strategy that led to the huge loss was "poorly conceived and vetted" and that traders in the bank's chief investment officer responsible for the losses "did not have the requisite understanding of the risks they took".
"These are not excuses, these are reasons," he said.
But he insisted the bank's "fortress" balance sheet "remains intact" despite the losses.
"We will not make light of these losses, but they should be put into perspective," he said.
"Our strong capital position and diversified business model did what they were supposed to do: cushion us against an unexpected loss in one area of our business."
On May 10, JPMorgan Chase shocked investors in revealing a $2bn loss in derivatives trading over just six weeks and said an additional $1bn loss was possible by the end of June.
The huge losses have raised questions about the largest US bank's internal controls and regulation in the financial system that was at the centre of the deep 2008-2009 recession.
JP Morgan's losses tarnished Dimon's reputation as Wall Street's "golden boy" and raised doubts about his aggressive campaign to roll back tougher regulation of banks, including a tight clampdown on how they trade their own assets for profits.
The launch of Wednesday's hearing was momentarily disrupted by two protesters shouting "stop foreclosures now", a reference to banks' moving to seize millions of homes from homeowners unable to service their mortgages since the 2008-2009 recession.
As the hearing opened, Senator Richard Shelby cited news reports of a more out-of-control CIO than the bank has admitted, asking whether taxpayers are protected from bailing out more banks as happened in the 2008 financial crisis.
"Did the losses from these trades threaten the safety and soundness of JPMorgan? And second, could it happen again?" Shelby asked.
He said the bank's losses show the need for regulators to require banks to hold higher levels of basic capital to keep them solid.
"Strong capital requirements provide a valuable buffer" against losses, he said, and are "a first line of defence against taxpayer bailouts".
Speaking to Al Jazeera, William Black, a former bank regulator and an associate professor of economics and law at the University of Missouri, said he agreed with a point made by one of the Democratic senators during Dimon's testimony - that JP Morgan was too big to manage and too big to regulate.
"What the administration is saying is that there are roughly 20 banks in America and about 15 outside of America, that if they fail - actually, when they fail - they will cause a global financial crisis," Black said.
"JP Morgan is top of that list."
Black described JP Mogan as a leading opponent of regulation that would reduce the risk of large banks "gambling on very risky derivatives".
Source: Al Jazeera and agencies