JPMorgan Chase & Co. (JPM), the largest U.S. bank, reported a $4.4 billion trading loss in its chief investment office, bigger than analysts estimated, that helped drive second-quarter profit down 9 percent. 
 
 Net income fell to $4.96 billion, or $1.21 a share, from $5.43 billion, or $1.27, in the same period a year earlier, the New York-based company said today in a statement. Six analysts surveyed by Bloomberg estimated the CIO trading loss at $4 billion. The company also restated first-quarter earnings, reducing net income by $459 million, and used securities gains and an $800 million accounting benefit to help boost profit. 
 
 The trading loss may complicate efforts by Chief Executive Officer Jamie Dimon, 56, to restore investor confidence after losing $39.7 billion in market value since April 5, when Bloomberg News first reported that the company had amassed an illiquid book of credit derivatives at the London unit. The firm also is being probed over the possible gaming of U.S. energy markets and was subpoenaed in global investigations of interest- rate fixing in London. 
 
 “The restatement is not good, and at first glance, the numbers are so-so,” said Paul Miller, a former examiner for the Philadelphia Federal Reserve Bank and analyst at FBR Capital Markets Corp. in Arlington, Virginia. 
 
 JPMorgan rose to $34.79 in New York trading at 7:36 a.m. from $34.04 yesterday. The shares were down 2.4 percent this year through yesterday. 
 
 Analysts’ Estimates 
 
 Second-quarter net income excluding the effect of accounting adjustments known as DVA was $1.09 a share. Excluding DVA, loan-loss reserve reductions and a Bear Stearns-related recovery, profit was 67 cents. Analysts surveyed by Bloomberg had estimated adjusted earnings per share of 76 cents. 
 
 In a departure from his customary earnings-day conference call, Dimon is meeting analysts in person for two hours starting at 7:30 a.m. today at the bank’s New York headquarters to field questions about the loss and what he’s doing to contain the damage. 
 
 Dimon dismissed reports about the London operation as a “tempest in a teapot” when the bank reported first-quarter earnings on April 13. He reversed course less than four weeks later, disclosing a $2 billion loss that he said could grow to $3 billion or more during the quarter. 
 
 Securities Sales 
 
 JPMorgan said May 10 that it had taken $1 billion in profits from securities sales in the CIO to mitigate the trading loss and planned more asset sales if needed to offset the damages, which was caused by a wrong-way bet on credit derivatives by London trader Bruno Iksil. Dimon hired Iksil’s boss, London CIO chief Achilles Macris, in 2006 with a mandate to generate profits. Macris and Iksil eventually built up a position in credit derivatives that was so large it couldn’t be unwound without roiling markets. 
 
 JPMorgan said today that it recently discovered information that suggests some individuals at the company may have been trying to avoid showing the full amount of the losses. All employees working on synthetic credit derivatives in the CIO have left the bank, the company said today. 
 
 “We have already completely overhauled CIO management and enhanced the governance standards within CIO,” Dimon said in the statement. “We believe these events to be isolated to CIO, but have taken the opportunity to apply lessons learned across the firm.” 
 
 The company said the CIO loss may increase by $800 million to as much as $1.6 billion in an extreme scenario. 
 
 Ina Drew 
 
 Chief Investment Officer Ina Drew, 55, retired four days after the loss was disclosed with about $57.5 million in stock, pension and other pay, according to regulatory filings and estimates from consulting firm Meridian Compensation Partners LLC. About $21.5 million of that money, based on the May 14 closing price, would have been automatically forfeited if she had been fired for cause. 
 
 JPMorgan said today it will claw back compensation from individuals responsible for the losses on a case-by-case basis. 
 
 Dimon is also grappling with historically low interest rates that have compressed profit margins on lending as well as yields on investments. Moshe Orenbuch, of Credit Suisse Group AG, was among analysts who lowered earnings projections for banks amid weak trading revenue and market turmoil caused by Europe’s sovereign debt crisis. 
 
 Corporate bond issuance dropped almost 19 percent in the second quarter from $927 billion a year earlier as companies backed away from plans to raise capital. 
 
 Europe Damper 
 
 “Europe continues to put a damper on just about everything,” said Nancy Bush, an analyst and contributing editor at SNL Financial LC, a research firm based in Charlottesville, Virginia. 
 
 Consumer credit is one bright spot for the industry as delinquency rates decline. Fewer borrowers fell behind on their credit-card payments in May, 2.35 percent, from 3.09 percent a year earlier, according to data compiled by Bloomberg. Government programs and mortgage rates near record lows have also helped fuel higher volume and bigger profits on home loans. 
 
 JPMorgan set aside $335 million more toward its litigation costs during the second quarter. Dimon previously told shareholders that the company would be making as much as $24 billion in annual profit if it weren’t for all of its mortgage losses. 
 
 Revenue fell 16 percent to $22.9 billion from $27.4 billion during the second quarter of last year. Revenue at the investment-banking unit fell 7 percent to $6.77 billion from $7.31 billion last year. 
 
 Fixed Income 
 
 Fixed-income and equity-markets revenue excluding accounting adjustments dropped to $4.54 billion from $5.36 billion a year earlier, the company said. 
 
 U.S. banks are in the middle of the industry’s worst two years of revenue growth since the Great Depression, according to Mike Mayo, an analyst with independent research firm CLSA Ltd. in New York. 
 
 Retail banking, which includes home loans and checking accounts, earned $2.27 billion, up from $383 million a year earlier. The bank’s net interest margin, a measure of lending profitability, declined to 2.47 percent from 2.72 percent a year earlier. 
 
 JPMorgan benefited from gains in mortgage lending as low interest rates and federal incentive programs encouraged homeowners to refinance. Mortgage fees and related revenue totaled $2.27 billion, up from $1.1 billion a year earlier. 
 
 Unemployment Rate 
 
 Demand for loans rose as the unemployment rate fell to 8.2 percent from 9.1 percent in the same period of 2011. Mortgage originations industrywide probably climbed 28 percent to $372 billion in the second quarter from the same period last year, driven by refinancings spurred by federal programs, according to the Mortgage Bankers Association. 
 
 Fewer consumers fell behind on their credit-card payments in the second quarter compared with the same period in 2011. Loans at least 30 days overdue, a signal of future write-offs, fell to 2.14 percent from 2.98 percent in 2011. Write-offs dropped to 4.35 percent from 5.82 percent the prior year. 
 
 To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.com. 
 
 To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net ||||| A Senate panel on Thursday issued a scathing assessment of JPMorgan's $6.2 billion trading loss last year. The investigation found that bank executives ignored growing risks and hid losses from investors and federal regulators. 
 
 Executives at JPMorgan understated the trading losses to federal examiners by hundreds of millions of dollars and dismissed questions raised about the trading risks, according to the report from the Senate Permanent Subcommittee on Investigations. 
 
 The report suggests that key executives, including CEO Jamie Dimon, were aware of huge losses at the bank, even while they were downplaying the risks publicly. The report also blames federal regulators for lax oversight that allowed America's largest bank to pile up risky bets. 
 
 On Thursday, JPMorgan acknowledged it made mistakes but rejected any assertions that it concealed losses or risks. A spokesman declined to comment directly on the accusation that Dimon knew of the trading loss in April. 
 
 "While we have repeatedly acknowledged mistakes, our senior management acted in good faith and never had any intent to mislead anyone," JPMorgan said in a statement Thursday. "We know we have made many mistakes .... We have taken significant steps to remediate these issues and to learn from them." 
 
 Sen. Carl Levin, the subcommittee's chairman, said the probe showed "many, many failures" at the bank, some of them "serious and indeed egregious." 
 
 The committee will question bank executives and regulators Friday at a hearing on the trading loss. 
 
 In April, news reports said a trader in JPMorgan's London office known as "the whale" had taken huge risks that were roiling the markets. Dimon immediately dismissed the reports as a "tempest in a teapot" during a conference call with analysts. 
 
 But in May, Dimon acknowledged that the bank had lost roughly $2 billon. And during testimony to a separate Senate panel in June, Dimon said the bank showed "bad judgment," was "stupid" and "took far too much risk." 
 
 The figure was later revised to more than $6 billion. 
 
 JPMorgan executives said publicly that the trades were made for the purpose of hedging against risk. An internal report at the bank blamed traders in the London unit for trying to hide the size of the loss and not keeping bank executives informed. 
 
 But the Senate report says executives inaccurately said the trading decisions were based on a long-term strategy and that the trading positions were fully transparent to regulators. And, it says there is evidence that Dimon and other key executives had information in April about the operation's huge and complex portfolio, as well as its losses for three straight months. 
 
 The bank "gambled away billions of dollars through risky and exotic trades, then intentionally hid its losses from investors and the public, showing complete disregard for risk management procedures and regulatory oversight," Sen. John McCain, the subcommittee's senior Republican, said Thursday. 
 
 The loss came less than four years after the 2008 financial crisis and hurt the reputation of a bank that had come through the crisis known for taking fewer risks than its competitors. Three employees in the London office were fired _ two senior managers and a trader. And Ina Drew, the chief investment officer overseeing the bank's trading strategy, resigned. 
 
 The trading loss also raised concerns that the largest banks still pose risks to the U.S. financial system. 
 
 The Senate report criticized the oversight of JPMorgan's trading operation by the Office of the Comptroller of the Currency, a Treasury Department agency. It said the agency failed to investigate the trading even when the London operation several times blew through pre-set risk limits, failed to notice when the unit didn't submit several required monthly reports, and accepted other reports that omitted key data. 
 
 "The OCC takes this matter very seriously. ... We are very disappointed that the bank misinformed the OCC, which hampered our supervisory efforts," agency spokesman Bryan Hubbard said Thursday. "We will take additional action as appropriate." 
 
 The agency acknowledges that there were shortcomings in its oversight of JPMorgan, Hubbard said. As a result of its review, the OCC has taken steps to improve its supervision of financial institutions, he said. 
 
 In January, the OCC and the Federal Reserve ordered JPMorgan to take steps to correct weak risk management that led to the trading loss. The bank wasn't fined under the agreements. It promised to strengthen its policies and procedures to control risk. 
 
 Drew will be among several witnesses Friday. So will former Chief Financial Officer Douglas Braunstein, who is accused in the Senate report of misleading investors during the April conference call. Comptroller Thomas Curry and two other agency officials also are scheduled to testify. 
 
 Shares in New York-based JPMorgan Chase & Co fell 26 cents, or 2 percent, to $49.96 in extended trading Thursday after the committee issued its report.
– JPMorgan reported a $4.4 billion trading loss this morning, a figure far worse than analysts were expecting, in the wake of the "London Whale" fiasco. That drove the bank's earnings down 8.7%, but still left it with $4.96 billion in profit for the second quarter, down only a bit from its $5.43 billion mark a year ago, the Wall Street Journal reports. "We are not proud of this moment, but we are proud of the company," Jamie Dimon said. "We're not making light of this error, but we do think it's an isolated event." At the same time, however, the bank said it would soon revise its first-quarter results southward, thanks to "recently discovered information that raises questions about the integrity of the trader marks and suggests that certain individuals may have been seeking to avoid showing the full amount of losses." Analysts tell Bloomberg that the larger-than-expected losses will leave the bank struggling to restore investor confidence. "The reputation problem will just get worse," one analyst said.