WASHINGTON -- Sen. Bob Corker, a Republican who serves on the Senate Banking Committee, has called for a hearing on the $2-billion trading loss by JPMorgan Chase & Co., saying that "policies are going to be derived out of what's happened."
Corker, who was a key participant in the debate over the 2010 financial reform law, said it was important for policymakers to get the facts about the situation and whether pending regulations would have prevented it.
"I'd like for us to be dealing with reality instead of myth and perception," the Tennessee lawmaker told CNBC today. "I just want to make sure we have a good policy outcome here."
Corker noted that some analysts have said such trading would have been prevented by the so-called Volcker Rule. The provision of the financial reform law, which is still being drafted by regulators, is intended to stop banks from taking excessive risks in trading for their own accounts, a practice known as proprietary trading.
Corker said his staff has talked with the Office of the Comptroller of the Currency bank examiner in charge of overseeing JPMorgan and "that's just absolutely not their perspective."
The authors of the Volcker Rule provision, Sens. Carl Levin, D-Mich., and Jeff Merkley, D-Ore., said Friday that the rule was intended to prevent such trades, but that draft regulations have a loophole that would have allowed the JPMorgan transactions. They called for regulators to close the loophole before finalizing the rule in July.
In a letter Friday to Senate Banking Committee Chairman Tim Johnson, D-S.D., Corker requested a hearing investigating the JPMorgan trading be held as quickly as possible.
He wrote that the key questions were whether lawmakers were "confident that taxpayers are fully protected from losses at major financial institutions," and whether the JPMorgan trades were "bona-fide hedging transactions, or were these poorly managed proprietary trades?"
Johnson has not said whether he will convene a hearing.
"The fact that this can happen at a bank with a solid reputation like JPMorgan is evidence that our banking regulators must remain vigilant, and why opponents of Wall Street reform must not be allowed to gut important protections for the financial system and taxpayers," Johnson said Friday.