By Sarah N. Lynch and Kim Dixon
WASHINGTON (Reuters) - JPMorgan Chase & Co Chief Executive Jamie Dimon on Wednesday lashed out at the government for a lawsuit alleging misdeeds at Bear Stearns, more than four years after JPMorgan was asked to rescue the teetering financial giant.
Dimon said the company is still paying the price for doing the Federal Reserve "a favor" by buying Bear Stearns in early 2008.
"I'm going to say we've lost $5 billion to $10 billion on various things related to Bear Stearns now. And yes, I put it in the unfair category," Dimon said, speaking at a Council on Foreign Relations event in Washington.
Dimon's candid comments come one week after the New York State Attorney General filed a lawsuit against JPMorgan, alleging that Bear Stearns deceived investors buying mortgage-backed securities in 2006 and 2007.
During a wide-ranging hour-long discussion that went from the "fiscal cliff" to the impact of regulations, Dimon bristled when a member of the audience asked him if he now regretted participating with the government to rescue Bear Stearns in light of the lawsuit.
"We didn't participate with the Federal Reserve, OK?" he said. "Let's get this one exactly right. We were asked to do it. We did it at great risk to ourselves ... Would I have done Bear Stearns again knowing what I know today? It's real close."
The federal government engineered the rescue during the Bush administration when regulators were desperate to find a buyer who could take on Bear Stearns' toxic assets and help calm markets.
Dimon went on to recount how he warned a senior regulator at the time of the deal to "please take into consideration when you want to come after us down the road for something that Bear Stearns did, that JPMorgan was asked to do this by the federal government."
He added that JPMorgan, which will report its third-quarter earnings on Friday, will come out fine in the end. But if he is ever put in a similar position again, he said he "wouldn't do it."
"I'm a big boy. I'll survive," he said. "But I think the government should think twice before they punish business every single time things go wrong."
"FISCAL CLIFF WAR ROOM"
Beyond Bear Stearns, Dimon also criticized the government for so far failing to seriously negotiate an agreement to avoid a fiscal cliff of $600 billion in tax hikes and spending cuts due to hit at the end of the year.
He said JPMorgan is "forming a fiscal cliff war room" and will be prepared.
"JP Morgan will survive a fiscal cliff - it is just terrible policy to allow it to get close," he said.
He backed several proposals supported by Democrats to raise revenues, including a higher individual tax rate for the wealthy and a hike in the capital gains tax to 20 percent while keeping corporate taxes low.
"I don't mind paying 39.6 percent in taxes," he said.
Dimon is one of a handful of CEOs who have been lobbying lawmakers to give businesses greater certainty around budget and taxes issues before the year's end.
Republicans want to extend low rates that expire on December 31 for all income groups, while President Barack Obama and Democrats want to extend the lower rates only for households earning up to $250,000.
These are the expiring tax rates first enacted by President George W. Bush. The current top rates are 33 percent and 35 percent. They would rise to 36 and 39.6 percent under the Democrats' proposal.
While a decision on the individual tax rates must be made before the end of the year, the corporate tax issue is almost certainly going to wait until next year at the earliest.
Obama and his Republican presidential rival Mitt Romney agree that the current 35 percent corporate tax rate should be reduced to be more competitive globally, but they disagree on the extent and how to fund such a rate cut.
Despite backing some of Obama's tax plans, Dimon told the audience he is "barely" still a Democrat.
During Wednesday's event, Dimon was also faced with questions about the "London whale" credit derivative trades that have so far racked up at least $5.8 billion in losses for the bank.
While Dimon has previously acknowledged his bank's failure to intervene sooner, he went even further on Wednesday in assigning himself personal responsibility for not detecting the problematic hedging strategy.
"I should have caught it ... I didn't."
He said the trading loss was "really intensely stupid" and "it's kind of embarrassing personally."
Dimon also touched on financial reforms more generally, saying he was frustrated with contradictory and overlapping regulations being pushed out by policymakers.
He said JPMorgan could see more than $1 billion in annual overhead costs from new international and domestic financial regulations, including the Basel III capital standards.
(Reporting by Sarah N. Lynch, Kim Dixon, and Karey Wutkowski in Washington; Editing by Gerald E. McCormick, Leslie Gevirtz and Phil Berlowitz)