[ by Howard Haykin ] Meredith Whitney said in an interview on Bloomberg radio that JPMorgan Chase's $2-$5 billion trading loss stemmed from profit-seeking bets, rather than hedges meant to mitigate loan losses - as CEO Jamie Dimon contends.

"It’s very hard to argue that what Jamie Dimon is now on the Hill for is a hedge," as Dimon testified at Tuesday's hearing before the House Financial Services Committee.  "A credit hedge in banking should be a loan-loss provision, plain and simple.  Anything else is a proprietary bet."

A more precise explanation from Mr. Dimon was to describe the loss as stemming from a hedge that "morphed into something I can’t justify." He has publicly opposed the so-called Volcker rule, a Dodd-Frank Act provision meant to limit deposit-taking lenders from making proprietary trades, or bets with their own money. "Of the large banks, JPMorgan has the lowest loan-to- deposit ratio.  It didn’t frankly seem to bother anyone there because they clearly were making money in this trading book." --- Meredith Whitney, CEO of Meredith Whitney Advisory Group LLC. Whitney Wasn't Finished. Ms. Whitney, 42, also disputed Dimon’s claim that bank regulation may curb lending.  Mr. Dimon, 56, confronted Federal Reserve Chairman Ben Bernanke at a public forum last year, and blamed excessive regulation for slowing the U.S. economic recovery.   In response to Mr. Dimon's charge, Ms. Whitney chose to agree and disagree:  Yes, "It stymies the velocity of money in the system, you have to hold more capital.  But in terms of lending, absolutely not." Her View of Dimon’s Washington Performance. Meredith Whitney said, of Dimon's appearance last week before the Senate Banking Committee, it went more smoothly than she had expected.  The market's positive take on Jamie Dimon's testimony caused investors to raise the share price of JPMorgan Chase.  She added how surprised she was, because "it’s a very difficult trade to explain." She also complimented Dimon, saying: "He charms, he’s incredible.  He gave the senators a massage, they gave him a massage back." For further details and Comments from the Gallery, go to:  [Bloomberg, 6/19/12]. For those interested, after the jump, you can read 15 comments posted about Ms. Whitney's statements.  [BTW, the C-I staff agrees with Ms. Whitney's take, and we've expressed our opinions over the past couple of weeks in postings.] 15 comments sls55 I'm no fan of Meredith Whitney, but she is right. Dimon specifically upped trading since 2010 to increase profits, and it has worked very well up until now. Those trades were not hedges, they were full on proprietary trades. If he kept a tight leash and employed some kind of proper risk management, JPM would have avoided all of this and made more profits. The key to the trade was position sizing, but when you're a bigshot like Bruno, you seem to lose sight of that. I'll give props to Boaz Weinstein for taking profits from JPM and teaching them some risk management lessons. justanotherfakename Greedy arrogant pampered Wall Street crooks make big bets backed by tax payers. That's a win win for Dimon and company, and a moral hazard for the rest of us. When he wins the bets, he takes the profit to great applause, if he loses a really really big bet, he's too big to fail, we the tax payers bail him out. Wouldn't you like a piece of that action? This isn't capitalism, it's a mafioso pseudo banking syndicate. Those fawning Senators looked pathetic under the sway of mafia Don pretty boy Dimon. Tom Ricciardi Surprising that an astute analyst such as Meredith Whitney wouldn't have picked up on Jamie Dimon's senate appearance last week. When questioned by Sen. Merkely and asked about lending vs. hedging as a philosophy, Dimon responded "We're not in the hedge fund business." But they are big time JPMAAM, that's for "alternative asset management" ie..hedge funds. They have a huge operation and offer "direct" hedge fund investing through their 100% owned Highbridge Capital. They certainly are in the hedge fund business. Emac2 Why list their age but not height and weight? Kudos to Whitney for calling it what it is. Their are too many cowards afraid to call out the criminals James Very refreshing to hear someone say that a bank with insured deposits should be loaning only against real assets that can be repossessed. A piece of paper, i.e. any derivative instrument, ultimately reduces to a deed on the Brooklyn Bridge. Too bad our so-smart, overpaid bank executives can't figure that one out. Heavenly Voice Why do the senators on the banking committee wish to conceal a practice which is well recognized as being detrimental to the financial security of the US and banking industry? It is at times like these which the senate ethics committee shows itself to be as "impotent" as the dry old men who comprise it. Men like Jamie Dimon are toxic to the banking profession and those senators who choose to close a blind eye are symptoms of a political influence peddling poison which will prove disasterous if allowed to go unabated. It is already eating away at the flesh of the body politic leaving behind exposed dead bone. bozomacginty The "Volker Rule" has already been castrated and made harmless by the Big Banks. It is a fool's errand to try and parse the language. The rules and the playing field must be made simple to deter the clever folks at the banks from end-running the simple folks at the regulators and the even simpler folks in the Congress. "Simple" as in re-institution of Glass-Steagall. Dorlan H. Francis “Of the large banks, JPMorgan has the lowest loan-to- deposit ratio,” said Whitney I wonder if Americans know why they cannot find good paying jobs. THEIR money that should be used putting AMERICANS to work is being used by the likes of Jamie DEAMON to gamble for the benefit of the banks and their shareholders. Mean while 19% of small businesses surveyed cited LACK OF CAPITAL as their greatest problem. ralphpetrillo But I have been stating this for weeks, but she is cute! Chris Harlos Cash is very charming. Dimon should be in the docket for SOX, accounting fraud, and securities fraud violations. Maybe he could charm his way to 20 years in the pen. LouAZ There is usually one person in every Company that really knows what's going on. That person must be rooted out and fired immediately. reubenr1 All of the Republican members of the committee have brown rings around their necks, right now. How it is that everyone else knows it was a bet and not them is pretty tricky stuff? He gave the senators a massage, they gave him a massage back." Message, handy j, handy j, massage STU PID “I was very surprised because it’s a very difficult trade to explain,” she said. “He charms, he’s incredible. He gave the senators a massage, they gave him a massage back.” Don't forget the 'happy endings' that were 'handed' back and forth. remyngtin Whitney's clueless