JPMorgan’s Chief Says Clawback Efforts Are ‘Likely’

WASHINGTON — JPMorgan Chase is “likely” to try to recover compensation from executives responsible for a recent multibillion-dollar trading blowup, according to Jamie Dimon, the bank’s chief executive.

In testimony on Wednesday before the Senate Banking Committee, Mr. Dimon assured lawmakers that the bank’s board was investigating the trading losses at the chief investment office. Once the investigation is complete, he said, the bank will decide whose paychecks to pursue.

“When the board finishes the review, you can expect we’ll take proper corrective action,” the executive told a packed hearing room, shortly after a parade of protesters jeered the chief executive. “There’s likely to be clawbacks.”

Mr. Dimon did not name the executives facing scrutiny, but one potential target is Ina Drew, the head of the chief investment unit.

Ms. Drew, who resigned from the bank last month, earned about $14 million last year, making her among the bank’s highest-paid employees.

JPMorgan, Mr. Dimon said, has broad authority to recoup pay. The bank, he said, can claw back compensation for “bad judgment” and other missteps.

“It’s pretty extensive the ability to claw back,” he said.

The revelation emerged from a hearing of more than two hours on Wednesday that featured Mr. Dimon’s first Congressional testimony since the bank disclosed the trading loss in May. He is also scheduled to testify next week before the House Financial Services Committee, which will host the final in a series of hearings into the trading losses.

On Wednesday, Mr. Dimon received a warm welcome from Republican lawmakers, suggesting that his status as Washington’s favorite banker remains intact. Some Republicans praised JPMorgan for navigating the financial crisis better than other Wall Street firms, and even sought Mr. Dimon’s advice on fixing the economy.

The chief executive, faced with more challenging questions from Democrats about gaps in risk management and his own leadership, both apologized for the mishap and defiantly defended his bank and its reputation.

“We’re doing what a bank is supposed to do,” he said, adding that he was proud of the bank.

Mr. Dimon acknowledged, however, that his own efforts to play down the threat of the trade in April were “dead wrong.”

“It changed into something I cannot publicly defend,” he said.

The JPMorgan chief disclosed on Wednesday for the first time that internal risk alarms were set off in March. The red flags came weeks before he told analysts that concerns about the chief investment office were a “complete tempest in a teapot,” raising new questions about Mr. Dimon’s disclosures.

Despite his focus on clawing back compensation, Mr. Dimon offered a loose defense of the bank’s pay packages. He dismissed concerns that outsize pay packages prompted the trading blunder, which has already cost the bank at least $3 billion.

 “Did the pay structure at the C.I.O. incentivize risky behavior?” asked Senator Tim Johnson, the South Dakota Democrat who leads the banking committee.

Mr. Dimon said, “I don’t believe that the compensation made the problem worse.”