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It took only a few weeks for JPMorgan to lose more than $2 billion. And it's taken just a few days more for a senior executive to lose her job. Ina Drew was Morgan's chief investment officer.
GREENE: Her departure has not ended the debate on Wall Street, or in Washington. The story is seeping into the presidential campaign, and lawmakers are asking what, if anything, they should change in bank regulations.
INSKEEP: The recent Dodd-Frank law imposed new rules on banks after the financial crisis, but a key provision of that law has yet to take effect.
We start our coverage with NPR's David Welna.
DAVID WELNA, BYLINE: The bad bet JPMorgan made is called a hedge, meant to counter the risk of other deals the bank made. Michigan Democratic Sen. Carl Levin says the Dodd-Frank law permits hedging, just not this kind.
SEN. CARL LEVIN: The language in the law is very clear. You can hedge, but you cannot increase risks with your hedging. You're supposed to decrease risks when you hedge.
WELNA: That language is part of Dodd-Frank's so-called Volcker Rule, named after former Fed chairman Paul Volcker. It says banks with federally insured deposits cannot gamble their own money, or that of others, on risky trading, even though it does allow them to hedge if done so properly. Levin does not think what JPMorgan did would pass that test.
LEVIN: If this law were in effect when they made these trades, I believe that these trades violated or were inconsistent with Dodd-Frank, yes. But Dodd-Frank is not in effect now, and the regulations that implement Dodd-Frank are not in effect yet. They should've been written long ago, but they're not yet written.
WELNA: And there's the rub. Federal regulators have taken months - and may take several more - to come up with guidelines to implement the Volcker Rule. Tennessee Republican Sen. Bob Corker is on the Banking Committee. Corker is calling for hearings by the Banking Committee on JPMorgan's money-losing episode.
SEN. BOB CORKER: I think it's really important for all of us to dig into this. I mean, this was a hedge against a hedge that was over-hedged.
WELNA: But the Senate's number two Republican, Jon Kyl, warns against what he calls a knee-jerk reaction. Suppose, says Kyl, that JPMorgan had instead made $2 billion on its investment.
SEN. JON KYL: Would there be calls for government intervention here? So what's the difference? Actually, here, since they lost, a problem that they weren't aware of was exposed, and you can bet they're going to do something about it internally. You don't need the government to tell them that they need to reform.
WELNA: Just this year, the GOP-run House has passed three bills, and House committees have passed four others, that loosen regulations in Dodd-Frank - which was passed when Democrats still controlled that chamber. Still, bank analysts are skeptical about such bills, at least for now.
Jaret Seiberg is a policy analyst with the Guggenheim Washington Research Group.
JARET SEIBERG: There's no appetite in the Senate to change Dodd-Frank. So the House can pass as many bills as they want. It's very hard to see any path to enactment until we get through the election.
WELNA: JPMorgan's embarrassing loss has already become part of election year politics. Yesterday on CBS, Elizabeth Warren, the Democrat vying for the seat held by Massachusetts Republican Sen. Scott Brown, demanded that JPMorgan's CEO Jamie Dimon give up his post as a director of the New York Federal Reserve Bank.
ELIZABETH WARREN: He is advising the New York Fed about the appropriate oversight of banks like his bank. And I think one way he takes responsibility for what's gone wrong is to resign from that position and say someone else should be in that public position, but that he should not be in it.
WELNA: Instead, JPMorgan announced yesterday that the woman who's led its hedging unit, Ina Drew, is retiring.
David Welna, NPR News, the Capitol. Transcript provided by NPR, Copyright NPR.