'How Do You Possibly Justify Your Process?'

Mr. Levin says that for the bank, the understatement of traders' losses helped reduce the red ink on the trades. Mr. Levin confronts Mr. Braunstein, asking whether it's appropriate and common practice for JPMorgan to value its trades aggressively to minimize losses for the bank. Mr. Braunstein tells Mr. Levin that the bank does not manipulate its valuation models to favor the bank. Growing more incensed, Mr. Levin asks Mr. Cavanagh: "How do you possibly justify your process?" Mr. Cavanagh explains that the bank was dealing with a marketplace that was roiled by news reports about the botched bets. Still, he says that the marking of the trades was fair. Mr. Levin asks whether it was "a coincidence" that the way the trades were valued shifted to reduce the losses "at the time that the losses were piling up." Mr. Levin asks the question in several permutations, prodding Mr. Cavanagh to answer the question. Mr. Cavanagh said that the change in marking the trades shifted in January 2012. Mr. Levin reminds Mr. Cavanagh that he is under oath. He revises his position and says that now he knows that improper marking did occur, especially in March 2012.