JPMorgan Chase was trying to prepare for new international regulations designed to make the financial system safer when it put on the disastrous hedging strategy that has cost it $2bn and counting.
Jamie Dimon, the bank's chief executive, made the revelation in written testimony submitted to the Senate Banking Committee in the US before a hearing into the losses later today.
Instead of simply selling risky assets in order to get in compliance with forthcoming capital standards expected in the so-called Basel III accord, JPMorgan embarked on an ill-fated plan to offset potential losses on the assets with a series of inter-locking derivatives trades.
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