Carl Levin

And do you think that this kind of practice is allowed by the GAAP?

But its general direction, its general theme is to lead to tougher risk controls, is it not?

OK. Now, shouldn't the model--and I will ask maybe Mr. Sullivan this question--that produces a 44-percent drop in VaR overnight raise a red flag, cause the OCC to investigate how that is possible?

Shouldn't that have been caught by the OCC? Shouldn't you have noticed that they did not review these limits for 3 years?

I do not think you need this amount of detail. You can still do your supervision without it.

That is OK. No, that is good.

This was described, this portfolio, as being a 'perilous size.'

We thank our witnesses here, and we have seen today a very disturbing picture which raises questions not just about JPMorgan but about derivatives in general.

It is his decision, not Mr. Braunstein's decision, to do that.

All right. Now, you also wrote in the email that the bank said, quote, that if you--referring to the OCC-- 'have been watching the position reports and the P&Ls,' do you know what position reports and P&Ls you could have been watching?

You did not consider that to be a high-risk activity.

We recommend requiring banks to identify all internal investment portfolios that include derivatives over a specified notional size.

The OCC allow optimization one time and then from there on, hey, quit it?

The Synthetic Credit Portfolio was not reducing the bank's risks but was increasing them?

Would you call that a high-risk approach?

That was a misstatement, misrepresentation, and flat out falsity, as far as I am concerned.

Regulators did not 'get the information' on those positions on a regular basis, did they?

Is it not obvious what was happening here, that these prices were being changed in order to reduce the loss on the books?

And then you mean that you would see where the review led to, but your first reaction would be this is a troublesome idea and we better look into it? Is that fair?

What we have seen during this investigation is the evidence that JPMorgan piled on risk, broke risk limits, hid losses, manipulated models, dodged oversight, misinformed the public.

Now, why should it be allowed on a one-time basis?

He was just pursuing a mathematical interest. He was not operating in furtherance of the bank's goals?

Well, we have already covered some of the matters involving hidden financial risks, mismarking, breaches of risk limits, and public disclosure problems.

And when he testified that the SCP was to protect against Scenarios 2 and 4, you go all the way over to number 10 to try to find some scenario in which it might be helpful.

But you knew that these trades were being made day-to-day.