SEC focusing on JPMorgan $2B loss

The head of the Securities and Exchange Commission said the agency is focused on a surprise $2-billion trading loss by JPMorgan Chase & Co.

"I think it's safe to say that all the regulators are focused on this," SEC chairman Mary Schapiro told reporters after a speech at a Washington conference Friday. She declined to make any further comment related to JPMorgan.

The bank, the largest in the United States by assets, disclosed the huge loss in a trading portfolio intended to help the bank manage credit risk Thursday afternoon. JPMorgan came through the 2008 financial crisis in much better health than its peers, keeping clear of risky investments that hurt many other banks.

The bank's chief executive, Jamie Dimon, has led the charge against tougher financial rules being drafted by regulators.

Now regulators may be emboldened to resist efforts to soften the so-called Volcker Rule, a key provision in the 2010 Wall Street reform law. The rule, still being finalized, would limit trading by banks for their own accounts.

"This regrettable news from JPMorgan Chase obviously goes counter to the bank's narrative blaming excessive regulation for the woes of financial institutions," said Rep. Barney Frank (D-Mass.), one of the lead authors of the law.

"The argument that financial institutions do not need the new rules to help them avoid the irresponsible actions that led to the crisis of 2008 is at least $2 billion harder to make today," he continued.

Dimon said the type of trading that led to the loss would not be banned by the so-called Volcker Rule, which takes effect this summer and will ban certain types of trading by banks with their own money.The Federal Reserve and Britain's banking regulator learned of the trading loss last month and have been in discussions with JPMorgan Chase about it, The New York Times reported Friday.