(CN) - Members of the U.S. House of Representatives Banking and Financial Services Committee grilled JPMorgan Chase CEO Jamie Dimon and the nation's chief financial regulators this week over $2 billion in losses reported by the bank in May.
     Republican members of the committee were stumped by how the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, and the Federal Reserve Board of Governors some with on-site examiners could have missed the dangerous trades made by the bank's Central Investment Office.
     In response, Comptroller of the Currency Thomas Curry, whose agency had 65 examiners on site at JPMorgan's office in New York and five in its London office where the credit default swap trades leading to the losses originated, said the information they had was only as good as the information the bank's senior management had.
     All of the regulators repeated this point. Curry said that they were investigating whether the information regulators are given is sufficiently granular or robust.
     This prompted Rep. Steve Pearce to ask what the point of having 65 examiners on site was if not to supervise the ongoing activity of the bank.
     "You people at the OCC say you are starting an investigation. I thought that's the reason you have people on location in order to watch what was going on," Pearce said, adding that the investigation should include communicating with people on site and deterining whether they're "doing their job or are they sitting with their feet on the desk drinking coffee."
     As pointed as the questions to the regulators sometimes were, they were less pointed than the barbs committee members aimed at each other.
     Chairman Spencer Bachus started the proceedings by praising regulators for making sure JPMorgan was sufficiently capitalized to weather the losses, noting that it was capital, not regulation that was the key to insulating taxpayers from government bailouts of institutions deemed too big to fail.
     But Bachus quickly segued into an attack on the Dodd-Frank Wall Street Reform and Consumer Protection Act, saying that its 400 plus rules and 20,000 pages failed to streamline "the convoluted and chaotic regulatory structure" of financial firms as he claimed house Republicans had proposed when in the minority.
     "How inefficient and fragmented is the current regulatory framework?" Bachus asked. "Well sitting before us today are five different regulators, all of whom have some supervisory responsibility over these trades and several of whom have examiners embedded in JPMorgan but none of whom apparently was either aware of the banks hedging strategy or raised concerns."
     Bachus went onto suggest the complexity of derivatives trading and Dodd-Frank itself made it impossible for any single regulator to do its job.
     The comments spurred Rep. Barney Frank, the ranking minority member and co-sponsor of Dodd-Frank, to confess that his memory seemed to have failed him with regard to any Republican proposals for supervisory consolidation before Democrats took over the house in 2008.
     "I do not remember that during the 12 years of Republican rule that any such consolidation proposal came forward. I apologize for the lapse, I am sure they will remind me of it if one existed," he said.
     Bachus later interrupted the proceedings to "correct the record" showing a copy of a bill the Republicans introduced, while in the minority, for consolidating regulatory authority. Frank asked when the bill was introduced, and, when told it was in March 2009 when the Democrats were in the majority, he asked if the committee held any hearings on the bill.
     "Well, you were the chairman," Bachus answered.
     "Well, now you've been the chairman for a year and a half have you scheduled any hearings on that?" Frank asked.
     "No we're having trouble enough dealing with Dodd-Frank," Bachus quipped.
     In his opening remarks, Frank said that the hearing was part of systematic effort by Republicans to "piece by piece, bite by bite ...deregulate derivatives, to take us back to where we were before the terrible crisis of 2008."
     The Republican members didn't bother to disagree, repeatedly asserting that Dodd-Frank was too complex and that it had enshrined taxpayer protection for too-big-to-fail institutions into statutory law, thus placing the nation in constant threat of government bail-outs.
     This prompted Rep. Michael Capuano to declare "The Red Sox are gonna win, the Red Sox are gonna win, the Red Sox are gonna win, they're still in last place. You can say it all day long but Dodd-Frank did not codify too-big-to-fail, it did just the opposite. It prevents it from happening in the future."
     In less contentious comments, CFTC Chairman Gary Gensler appealed to the committee not to exempt off-shore branches of American banks from oversight under Dodd-Frank, noting that the collapse of Lehman Brothers, AIG, Bear Stearns and, a decade ago, Long Term Capital Management, were all caused in part by trades originating in London or the Cayman Islands.
     During most of the two hour hearing, SEC Chairman Mary Shapiro, acting FDIC Chairman Martin Gruenberg, Federal Reserve Board of Governors General Counsel Scott Alvarez kept to quiet themes of proper risk management and regulatory reform, repeatedly pointing out the limited role they play in regulating the trades carried out by JPMorgan's Central Investment Office.
     All agreed that the process for finagling rules to comply with Dodd-Frank was taking a long time.
     After the regulators were through, JPMorgan CEO Jamie Dimon took his turn before the committee, the second time he has come before lawmakers to answer questions about losses at his bank.
     Partisanship continued to heat up the hearing room with Democrats hectoring Dimon about his previous statements in support of Dodd-Frank reforms and whether his pay was on the table for clawbacks, while Republicans tried draw him out on potential failures by regulators to do their jobs.
     Consistent with his reputation, Dimon was unflappable, even when Rep. Frank accused him of filibustering for not bein