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“CIO’s traders did not have the requisite understanding of the risks they took” on bets that were supposed to hedge credit risk, Mr. Dimon said. “When the positions began to experience losses in March and early April, they incorrectly concluded that those losses were the result of anomalous and temporary market movements.”Mr. Dimon, who’s also set to face the U.S. House Financial Services Committee on June 19, finds himself in the middle of a renewed debate about whether the so-called Volcker rule, which would curb trading by deposit-taking banks, should be tightened. While Mr. Dimon didn’t comment on the size of the loss from the trades, he said the second quarter would be “solidly profitable.”

“The lessons learned from the recent failures in risk management at JPMorgan Chase will be an important input into efforts to design the Dodd-Frank Act reforms including a strong Volcker rule,” U.S. Treasury Department deputy secretary Neal Wolin told the Senate panel last week.

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The bank instructed the CIO in December to reduce its risk-weighted assets to prepare for new international capital rules. Instead, the office in mid-January “embarked on a complex strategy that entailed adding positions that it believed would offset the existing ones,” Mr. Dimon said. The portfolio instead got larger and the problem got worse, he said.

Mr. Dimon said that the risk committee structures and processes were not as robust in the CIO as they should have been. The division’s London team built up a book of credit derivatives that became so large that employees couldn’t unwind it without roiling markets or incurring large losses, current and former executives have said.