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JPM Actions Would Not Be Permitted Under Volcker: Sen. Levin

“Regulations just got more teeth,” said trader Steve Grasso after hearing commentary from Senator Carl Levin on CNBC.

“This is going to be a political football right up until the elections.”

Responding to CEO Jamie Dimon’s disclosure that JPMorgan suffered an unexpected $2 billion trading loss, the Michigan Senator told CNBC that, as the rules stand today, the bank’s actions would not be permitted under the Volcker Rule.

Levin said under Volcker, “banks cannot bet on the direction of the economy." And Levin was quick to add, “by Jamie Dimon’s own admission, this was a bet on the direction of the economy.”

Levin also said he was hopeful that regulators would not water down the rules when they make a final decision about their interpretation in July. Regulators have struggled with how to keep rules broad enough to allow for bona fide hedging yet narrow enough to ensure that banks cannot pass off speculative bets as hedges.

"If the regulators do what the law says and define hedging properly, this activity would not be permitted," Levin said.

Levin was also very critical of Dimon's efforts to fight against regulation.

"Dimon argued that activities which occur outside the US should not be subject to the Volcker Rule," said Levin. "These events happened in London."

Levin said banks should not be looking for loopholes.

Levin went on to say these events renew his belief that the public wants a cop on the beat on Wall Street. “And that's the very purpose of Volcker."

Although Levin said there are no plans for a hearing at this point – he didn’t rule out the possibility of one down the road.

If you’re a trader, the Fast Money pros said that although JPMorgan may have been a value play earlier in the week, now it's not. “If you’re planning to establish a position, I’d be very careful,” said Grasso. "Personally, I wouldn't do it."

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Posted by CNBC's Lee Brodie


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Trader disclosure: On May 11, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Patty Edwards is long JWN; Patty Edwards is long BMO; Patty Edwards is long BKCC; Patty Edwards is long GLD; Patty Edwards is long INTC; Patty Edwards is long PVH; Patty Edwards is long JNK; Patty Edwards is long LQD; Patty Edwards is long T; Patty Edwards is long NKW; Patty Edwards is long MSFT; Jon Najarian is long GGLU; Jon Najarian is long DDMD; Jon Najarian is long CME; Jon Najarian is long CBOE; Jon Najarian is long CIGX; Jon Najarian is long call spreads in CNO; Jon Najarian is long call spreads in AAPL; Jon Najarian is long call spreads in SPLS; Jon Najarian is long call spreads in JPM; Jon Najarian is long call spreads in MSFT; Jon Najarian is long call spreads in VIVID; Jon Najarian is long call spreads in ARNA; Steve Grasso is long ASTM; Steve Grasso is long AVAV; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long NUAN; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA

For Glenn Schorr
Nomura Securities International, Inc has received compensation for non-investment banking products or services from the issuer in the past 12 months: JPM
Nomura Securities International, Inc had a non-investment banking securities related services client relationship with the issuer during the past 12 months JPM
Nomura Securities International, Inc had a non-securities related services client relationship with the issuer during the past 12 months JPM
A Nomura Group Company had an investment banking services client relationship with the issuer during the past 12 months JPM
A Nomura Group Company has received compensation for investment banking services from the issuer in the past 12 months JPM
Nomura Securities International Inc. makes a market in securities of the issuer JPM

For Michael Binetti
UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of the following companies' common equity securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end): JCP
The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in NKE
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: KKS
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: RL
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.: KKS
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.: RL
Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: KKS
Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: RL

Jonathan Chaplin
As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company: S
As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company: LEAP
As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company: VZ
As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company: T
As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company: CLWR
As of the date of this report, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company: PCS





CNBC.com with wires.

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