JPMorgan altered the risk model in mid-January without telling investors then. The firm didn't disclose the change on April 13, when it reported financial results and said in a separate regulatory filing that VaR at the CIO averaged $67 million. When the company realized the new version was flawed and reverted to the old model, it showed VaR averaged $129 million and ended the quarter at $186 million.

The SEC is looking at whether the change had the effect of “understating the value-at-risk significantly,” said Schapiro, who turned 57 yesterday.

Dimon, 56, told the House panel that the new VaR model, while not causing the loss, “may have aggravated what happened.”

VaR represents the maximum amount that traders would expect to lose on 95 out of 100 trading days, according to JPMorgan. It's recalculated daily, and the quarterly average is reported in securities filings.

The measure “is not required to be disclosed in the earnings release, but if you choose to speak to it, you must speak truthfully and completely,” Schapiro, 57, told the House panel.

JPMorgan's loss could balloon beyond $2 billion as the bank untangles some of the trades, Dimon has said. He told lawmakers that he won't provide an update on the loss until the bank posts second-quarter results before U.S. markets open on July 13.

'Dead Wrong'

Dimon said he was “dead wrong” when he dismissed news reports about the trades as a “tempest in a teapot” during an earnings call with analysts on April 13, three days after the London book lost $300 million in a single day.

“Our folks had looked at reports after that about how bad it can get,” Dimon said. “We stress-tested it. Some of the stress reports, I may have seen them, but they reported to me that it doesn't show it could get that much worse.”

U.S. Representative Brad Miller, a North Carolina Democrat, questioned Dimon's reliance on information from his management team in downplaying the seriousness of the problem. “It seemed like there must be a limit on that entitlement if you have noticed that there may be something wrong,” Miller said.

Dimon, as he testified about the London team's losses, encouraged Congress to limit the international reach of swaps regulations required under the Dodd-Frank Act.

“If JPMorgan overseas operates under different rules than our foreign competitors, we can no longer provide the best products and services to our U.S. clients or our foreign clients,” Dimon said. “They will go elsewhere if we can't give them the best possible deal.”

The Commodity Futures Trading Commission, the main U.S. derivatives regulator, is poised to propose guidance on June 21 that would extend swaps rules to foreign branches and subsidiaries of JPMorgan, Goldman Sachs Group Inc., Citigroup Inc. and other U.S. banks.

When Dimon appeared before the Senate Banking Committee on June 13, lawmakers apologized for questioning him. He was asked for his opinion on subjects including Europe's debt crisis and how lawmakers should resolve the so-called fiscal cliff after the end of the year, when automatic tax increases and budget cuts are set to pull billions of dollars of purchasing power out of the U.S. economy.

Cooler Reception

Dimon was less warmly received in the House where lawmakers pressed him for more details about the bank's disclosures, the change in VaR and lobbying against federal rules.

Representative Stephen Lynch, a Massachusetts Democrat, pressed House Financial Services Committee Chairman Spencer Bachus, an Alabama Republican, to require Dimon to testify under oath. Bachus declined, saying it wasn't the committee's tradition to require witnesses to deliver sworn testimony.

Representative Gary Ackerman, a New York Democrat, likened JPMorgan's trade to gambling.

“If you are right a majority of the time, then it makes a bunch of money for the guys who did it and doesn't help the company, the industry, the economy or the country at all,” Ackerman said. “And if you're wrong, it puts systemically, everything at risk.”

Representative Maxine Waters, a California Democrat, asked Dimon to explain why JPMorgan has lobbied against parts of Dodd-Frank. The CEO has been a critic of the so-called Volcker rule, a provision meant to limit lenders from making proprietary trades, or bets with their own money.

“Lobbying is a constitutional right and we have a right to have our voice heard,” he told Waters.

Dimon, meanwhile, said it isn't necessary for his voice to be heard in the boardroom of the Federal Reserve Bank of New York, where he's a director. Senator Bernie Sanders, a Vermont independent, introduced legislation on May 22 that would ban employees of bank holding companies or other firms regulated by the Fed from serving on regional Fed bank boards.

Dimon reminded lawmakers that Congress is responsible for writing the laws that govern the central bank and said his role at the New York Fed is limited. He doesn't vote on the New York Fed's president or get involved in supervision, he said.

“It's more of an informational advisory group,” he said.

The heads of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and CFTC, as well as Fed General Counsel Scott Alvarez, were grilled along with the SEC's Schapiro over how they could have missed the trading debacle.

'Held Accountable'

“Just as JPMorgan should be and is being held accountable for its risk-management failures, accountability must also be demanded of the federal regulators who oversee the bank's activities,” Bachus said.

Comptroller of the Currency Thomas J. Curry said his agency is reviewing its staffing inside JPMorgan's London operations.

“We will use our experience here, our review of JPMorgan Chase, to re-evaluate the numbers and strength of the personnel in our London office,” he said.

The hearing drew protests from about two dozen nurses wearing green and red caps and holding signs as they chanted “Jamie Dimon, you're no good, the people need a Robin Hood.”

“He's a really good example of the kind of reckless speculation that should be taxed,” said Matthew Kavanagh, director of U.S. advocacy for Health Gap, an AIDS activist organization that organized the protest with National Nurses United. The groups are lobbying for a “Robin Hood” tax on derivatives, stock, currency and other Wall Street transactions to subsidize health care benefits.

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