WASHINGTON (CNNMoney) -- The Commodity Futures Trading Commission is investigating JPMorgan Chase's $2 billion losses, the regulator told a Senate panel on Tuesday.
Gary Gensler, chairman of the Commodity Futures Trading Commission, told the Senate Banking Committee that JPMorgan's losses are worth looking into, because as a U.S. bank, "it is an entity with direct access to the Federal Reserve's discount window and federal deposit insurance."
Gensler told the panel he couldn't provide specific information about the investigation. But he did say that he first learned about the questionable trades from press reports. The CFTC doesn't have regulators on the ground yet to look at bank trades.
"Currently, the American public is not protected in that way," Gensler said, as far as having regulators looking at the trades as they happen.
But thanks to Wall Street reforms, the commission does have the power to look at fraud and manipulation charges with regard to the JPMorgan Chase trades.
SEC Chairman Mary Schapiro told the committee Tuesday that her agency's investigation is limited, because the trades happened in divisions of the banking giant that aren't subject to SEC regulation.
"We did not have any direct oversight or knowledge of the transactions," Schapiro said. She stated the SEC's investigation would target the "appropriateness and completeness of the entity's financial reporting and other public disclosures."
Regulators have been struggling for months to figure out who should be included in a new crackdown on swaps or derivatives -- complex financial bets derived from other financial products, such as the price of jet fuel or mortgages.
Derivatives were the key reason that American taxpayers were on the hook for the American International Group ( , Fortune 500) bailout in 2008. Derivatives also threatened to take down the global financial system when Lehman Brothers collapsed.
When Congress passed Wall Street reforms in 2010, lawmakers left the big decisions of how to regulate derivatives up to supervising agencies. Generally, the Democratic-controlled Congress wanted swaps to be more transparent and safer.
The two regulatory bodies in charge of derivatives, the Securities and Exchange Commission and the Commodity Futures Trading Commission, originally suggested that the new rules should target those who trade more than $100 million worth of swaps a year.
In April, regulators backed off the tougher rules by narrowing the definition of who qualifies as a swaps dealer, and raising the threshold from a suggested $100 million to $8 billion in swaps traded each year.
Gensler made it clear he thinks that once the Dodd-Frank Wall Street reforms are fully implemented, it will be illegal for JPMorgan Chase to make the kinds of trades that resulted in the $2 billion in losses.
He clarified that Dodd-Frank allows for trades made to hedge against "individual and aggregate positions" -- not to guard against future economic losses, as JPMorgan Chase had described its trades.
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