Jamie Dimon May Meet With Janitor About Pay

June 19, 2012 -- JPMorgan Chase CEO Jamie Dimon was in the hot seat again today, defending the country's biggest bank on Capitol Hill over risk-taking and trading losses then confronted later by a janitor about her pay.

Dimon testified before the House Financial Services Committee on Tuesday after the $2 billion and counting loss disclosed last month from JPMorgan's chief investment office. Lawmakers are worried that risky trading could lead to another taxpayer-funded bailout of the "too big to fail" banks, including JPMorgan.

The House committee is over twice the size of the Senate Banking committee, and peppered Dimon with questions last week, and asked more pointed questions to the chairman and CEO. And after the hearing, Dimon was confronted by a janitor employed in JPMorgan Chase tower in Houston.

Adriana Vasquez, 37, asked Dimon why the company, which has made billions in profits, is not paying workers who clean the company's buildings a "living wage."

Dimon told her to "call his office" to arrange a meeting.

Vasquez, who does not speak English but spoke through a translator provided by the Service Employees International Union (SEIU), said she has been in the country for 16 years after leaving Costa Rica.

The SEIU said janitors in Houston like Vasquez make $9,000 a year and are hoping for a 50 cent raise. They have been offered a 10 cent raise over the next five years by the Houston Area Contractors Association.

About 3,200 janitors, whose contracts expired May 31, have said they would strike if they are not paid $10 an hour over the next three years.

Rep. Al Green, D-Texas, said he plans to meet with Dimon to discuss the issue.

"The average janitor in Houston is making less than the poverty level," Green said during the hearing. "I want to meet with you about something I call, 'too small to live off.'"

Jim Sinegal, director of financial services research at Morningstar, an investment firm, said he had expected a "less cordial" hearing than that of last week.

"I thought Dimon might have been more combative, but he seemed content to fall back on his talking points rather than escalate the debate," Sinegal said regarding JPMorgan's financial loss. "A few of the questioners clearly did their homework, although others didn't, and Dimon had some trouble with a few admittedly difficult questions."

Rep. Barney Frank, D-Mass., Rep. Maxine Waters, D-Calif., Rep. Carolyn Maloney, D-N.Y., Rep. Patrick McHenry, R-N.C., were among those who grilled Dimon about everything from jobs, Dimon's salary and, of course, Dodd-Frank Act's financial regulation.

"Parts of Dodd-Frank we supported, parts of Dodd-Frank we didn't support," Dimon said in response to a question by McHenry about whether he supported the legislation signed into law in July 2010.

"I remind people we do have the best capital markets in the world," Dimon said.

Sinegal said one interesting question was about the apparent discrepancy between JPMorgan's possession of excess deposits, which are invested by the company's chief investment office, and the number of small businesses that are still having trouble obtaining loans in the aftermath of the financial crisis.

"Like many banks, we have more deposits than loans – at quarter end, we held approximately $1.1 trillion in deposits and $700 billion in loans," Dimon said in his prepared testimony.

Frank asked Dimon for his thoughts about derivative trade exemptions to which Dimon explained that JPMorgan's trades were cleared. The long-standing representative from Massachusetts also asked Dimon about a proposal to cut funds from the Commodity Futures Trading Commission (CFTC). He answered that he has "never looked at the CFTC budget" and could not answer the question.

Frank said he was "disappointed" by Dimon's responses.

In answer to another question from Frank, Dimon said he did not know if he would be the subject of potential clawbacks by the board of directors which determines his compensation.

"I can't tell my board what to do," Dimon told Frank.

Rep. Maloney, who represents the district in which Dimon resides, accused JPMorgan of "sending" jobs to London to which he responded that the company follows its customers and the time difference provided some benefit in operating there.

Maloney seemed to momentarily stump Dimon when she asked him about the timing of the company's disclosure on May 10 of its losses.

Dimon paused and conferred with his general counsel who sat behind him. Dimon eventually said he did not understand the extent of the losses until later in April.

"We disclosed what we knew when we knew it," Dimon said during the hearing.

The company will disclose the size of the loss on July 13 when it releases its second quarter results.

The chairwoman of the Securities and Exchange Commission, Mary Shapiro, said last month there could be sanctions against JPMorgan if it violated disclosure rules about the risk measurement known as value-at-risk, or VaR, which measures how much a firm could lose on securities.

Dimon's illustrious career in finance began after the Harvard Business School to American Express, Citigroup, and Banc One, where he became CEO in 2000. In 2004, when Banc One was purchased by JPMorgan, he became president of the combined company, then later CEO. On his watch, JPMorgan has grown to be the biggest U.S. bank in terms of market capitalization and assets under management.

"Wall Street for the most part are honest, hardworking, decent people," Dimon told the committee, and is "trusted" by clients.

"All firms are different," Dimon said. "I can't speak for every firm while I'm standing here."

Dimon stressed that he was against the notion of "too big to fail," that the government will bail out large institutions with taxpayer money. He later told the committee JPMorgan's goal is "not to be the biggest but the best."

Before the question and answer session, Dimon's four-page prepared remarks for Tuesday were nearly identical to those of last week before the Senate committee.

"We will lose some of our shareholders' money - and for that, we feel terrible - but no client, customer or taxpayer money was impacted by this incident," he said in his prepared remarks both last week and on Tuesday.

Dimon told the committee it would be more effective to discuss financial rule-making behind closed doors, not during a hearing, and "not pretend they're either for Volcker or against Volcker."

Regulation is not "binary" but "complicated," he stressed several times.

Before Dimon appeared before the committee, the heads of various regulatory agencies testified, including the chairmen of the Securities and Exchange Commission, CFTC, Federal Deposit Insurance Corporation and the general counsel of the Federal Reserve Board of Governors.

Last week, Dimon told the Senate Banking Committee that the trades that led to billions in losses were placed by traders who didn't understand the risks they were taking, which could not have been prevented regulation.

Dimon has been repeatedly asked by lawmakers to comment about whether the Dodd-Frank Act's Volcker Rule, which prohibits certain proprietary trading and has yet to be finalized, could have stopped the debacle.

When pressed by Sen. David Vitter, R-La., about the Volcker Rule, Dimon called the regulation, as it is described thus far, as "vague" and "unnecessary." Instead, Dimon said what are needed from financial firms are factors such as, proper capital, liquidity, risk measures and risk controls.

The CEO said he was "dead wrong" when he dismissed a trading loss from the London office as a "tempest in a teapot" before he learned the bank made a $2 billion bad bet. He hinted that those responsible may have pay taken back from them in clawbacks.

"It's likely that there will be clawbacks," Dimon told the Senate committee last week.

Dimon told the committee he was misinformed about a strategy with a synthetic credit portfolio that was meant to hedge risks but "ultimately resulted in even more complex and hard-to-manage risks." This led to trades, announced by JPMorgan on May 10, that may have led to losses as high as $5 billion, according to the Wall Street Journal. A week later, the FBI said it opened a routine inquiry about the trading losses.

In a conference call on April 13, he peremptorily dismissed worries over the trades made by JPMorgan's London office as "a tempest in a teapot."

"When I had made that statement, I was dead wrong," Dimon told the Senate committee. He said he had "the right" to rely on information from the company's chief investment officer, Ina Drew, and her office in London.

"I was assured by them they thought this was an isolated small issue and that it was not a big problem," Dimon said last week.

ABC News' Alan Farnham, Matthew Larotonda, and Sunlen Miller contributed to this report.