Jamie Dimon Lied To Regulators. Will He Be Indicted? Ha, Ha!

Washington dealt a double blow Thursday to JPMorgan Chase as a Senate report accused its iconic chief executive of hiding information about a massive loss from regulators while the Federal Reserve unexpectedly said it had found a “weakness” in the bank’s capital plans.

Jamie Dimon should be in jail and JPMorgan Chase should be broken up, but we already know why neither of those things are likely to happen. Eric Holder is a friend to Wall Street, as is the rest of the Obama administration. Hopefully some of our more progressive senators will turn up the heat over this latest news:

Washington dealt a double blow Thursday to JPMorgan Chase as a Senate report accused its iconic chief executive of hiding information about a massive loss from regulators while the Federal Reserve unexpectedly said it had found a “weakness” in the bank’s capital plans.

The twin announcements, both unveiled in the late afternoon, escalates the problems for JPMorgan, the nation’s largest bank and arguably its most prestigious. Once viewed as the strongest bank to emerge from the 2008 financial crisis, the firm on Thursday watched its weaker rivals, Bank of America and Citigroup, sail through the Fed’s examination.

Perhaps more pressing is a report from the Senate’s Permanent Subcommittee on Investigations, which plans to hold a hearing Friday to probe the behavior of current and former senior bank executives as they tried to contain the fallout from a series of damaging trades, initiated by a trader known as the “London Whale.” The bets ultimately cost the bank about $6.2 billion.

The Senate report is the first to suggest that JPMorgan’s chief executive Jamie Dimon was less than forthright with regulators as he learned of the mounting losses. To date, Dimon has acknowledged that the bank failed to manage its risks, which allowed the bad trades to persist.

The report takes the bank to task for hiding losses for three months last year, overstating the value of its trading positions and ignoring red flags. When regulators grew concerned, JPMorgan withheld information about the nature of the portfolio, Senate investigators say.

More fun to come today as Matt Taibbi liveblogs a 9:30 a.m. hearing held by Senator Carl Levin's Permanent Subcommittee on Investigations as they interview J.P. Morgan Chase executives and high-ranking federal regulators in an all-day hearing entitled, "J.P. Morgan Chase "Whale" Trades: A Case History Of Derivatives Risks And Abuses." (You can watch here or on CSPAN3. If you read this first, it'll be easier to follow.)

Anyway, officials from Chase and the OCC are being dragged in tomorrow to answer some heavy questions about all of this. Expect a lot of double-talk, sweaty foreheads, pompous "You just don't understand because you don't make enough money" excuses, and other sordid behaviors. Tune in here for updates.

In the meantime, kudos to Senator Levin and to his Republican partner in this investigation, John McCain, for taking on this topic. Increasingly, key voices in the upper chamber like these two, plus Ohio's Sherrod Brown, Iowa's Chuck Grassley, Oregon's Jeff Merkley, Vermont's Bernie Sanders and others are starting to act genuinely worried about the Too Big to Fail issue. Their determination to keep it in the public eye is, to me, a signal that a consensus is forming behind the scenes on the Hill.

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