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J.P. Morgan CEO Jamie Dimon testifies before the U.S. Senate committee.

 Updated at 12:20 p.m. ET: The hearing has ended, and the market appears to be applauding J.P. Morgan CEO Jamie Dimon’s performance before a Senate committee Wednesday morning.

Shares of J.P. Morgan were lately up 2.2 percent at $34.50 and the third strongest gainer in the SP 500 index.

Earlier, responding to a question from Sen. Michael Bennet, D-Colo., Dimon took a page out of Fed Chairman Ben Bernanke’s book and talked about the “fiscal cliff” looming in the new year, when tax cuts and automatic spending cuts will hit simultaneously.

Bernanke has warned that the recovery could suffer because of it and has urged Congress to take steps.

Dimon said, “The fiscal cliff may not wait until Dec. 31.”

He said Congress better do something now before markets and businesses themselves take steps.

He touted the Simpson-Bowles deficit reduction plan and said the specifics are not as important as getting something done.

Sen. David Vitter, R-La., just asked if Dimon thought there could be a “true version” of the Volcker rule, which is named for former Fed Chairman Paul Volcker and is intended to reduce risky trading by banks with customer deposits.

Dimon said: “I think we’re going to really struggle to get it right.”

Vitter asked: What if we were to start with a blank page and rewrote it?

“I think it’s unnecessary,” Dimon said. “It’s just too confusing.” He said risk could be controlled with proper capital and risk controls.

A testy moment when Sen. Alan Merkley, D-Ore., asks Dimon about TARP (the Troubled Asset Relief Program), which was used by the U.S. government to purchase assets and equity from financial institutions to strengthen them during the 2008 financial crisis.

Dimon angrily said his bank did not need TARP, but was asked to accept it by “the Treasury Secretary of the United States.”

Merkley tried to stop him from elaborating, saying: “Sir this is not your hearing.”

Sen. Jerry Moran, (R-KS) asks how Jamie Dimon manages a firm the size of JP Morgan and how to prevent taxpayers from bailing out big banks.

Sen. Jon Tester, D-Mont., questioned Dimon about what JPMorgan knew and when concerning MF Global, which went bankrupt after bad bets on European debt and lost $1.6 billion of clients’ money.

Tester queried why JPMorgan took so long to return millions of dollars it got in the final days of MF to the court-appointed trustees. Dimon said the bank has cooperated with the trustees and that the bank was awaiting guidance on the money.

He also said that he hoped the farmers who lost their money in the debacle would get all their funds back. “I still think they will,” he said.

Sen. Herb Kohl, D-Wisc., grilled Dimon on problems in the industry concerning mortgage loan paperwork and on foreclosures. He said one of his constituents wrote to him about losing her home because of bad paperwork. Dimon told the senator to send him the information and he’d “take care of it.”

“We were not very good at it when the problems started,” he said, referring to the onset of the real estate crisis, but has improved.

“We’re doing it better. We’re doing it faster,” he added.

Sen. Mike Johanns, R-Neb., asked Dimon how many regulators JPMorgan has on site. Dimon responded that he believes there are hundreds of them.

“We have people who are assigned specifically to deal with regulators and we deal with them,” he said.

Dimon estimated that regulations cost JPMorgan about $1 billion a year globally for approximately 8,000 programs. He said JPMorgan will comply with all the regulators “but it will be costly.”

Sen. Jim DeMint, (R-SC), asks JPMorgan’s CEO what Congress needs to do to make the system operate better.

Sen. Jim Demint, R-S.C., took aim at Dodd-Frank financial reform, as have others on the committee before him.

He asked Dimon:

“What do you think we need to do or take apart of what we’ve already done” to allow the industry to operate better and not put taxpayers at risk.

Dimon responded:

“I believe in strong regulation,” but not necessarily more regulation. “I would prefer a simple, clean ,strong regulatory system,” he said.  “And that’s not what we did.”

He said that it’s not clear to him who has the regulatory responsibility.

Senator Bob Menendez came out fighting, saying J.P. Morgan’s “fortress balance sheet” has a “moat dug by taxpayers,” noting that the American taxpayer have played a big part in keeping his Dimon’s bank healthy.

He has also accused Dimon of calling capital rules for banks “anti-American.”

Dimon, demonstrating some annoyance, denied the charge.

Sen. Robert “Bob” Menendez wants to know if hedging is really “gambling” and asks Mr. Dimon about his critical comments on enhanced banking oversight.

Earlier, Dimon said he doesn’t think regulators couldn’t have caught the risky trades that led to the multi-billion dollar losses at JPMorgan.

He said regulation is a matter of “continuous improvement.”

When asked if Dodd-Frank made the financial system safer, Dimon, who appeared to be trying to avoid answering the question responded, “I don’t know.”

New York Sen. Chuck Schumer asked Dimon: What’s to stop the big trading losses at J.P. Morgan from happening again?

“Were we just lucky that we find out about this when we did?” he asked.

“We weren’t just lucky,” Dimon responded. He added that banks are better capitalized, risk committees are more engaged. A lot of the controls have happened already in companies across America since the financial crisis.

Schumer asked Dimon about clawbacks — efforts to recover compensation paid to employees who engaged in risky behavior that negatively impact companies and their shareholders.

“Seems that’s an appropriate thing to do,” he said and asked Dimon how it how it works.

Sen. Chuck Schumer, (D-NY) asks Mr. Dimon about what went wrong with the risk committees at JPMorgan and how improvements can be made going forward.

Dimon said that here are several layers, but for senior people we can claw back for bad judgment.

“It’s pretty extensive,” Dimon said. He said the board will review every single person in the current situation and what they did. He added that the firm’s new claw back policies have not been used yet.

On the Volcker rule to restrict trading by banks in certain kinds of speculative instruments and so reduce risk, Dimon said.

“It’s hard to make a bright line between proprietary trading and hedging.”

He also said that he understands the intent of the Volcker rule.

“The devil will be in the details,” however, he said.

Senate Banking Committee Chairman Tim Johnson opened the questioning of JPMorgan Chase’s Chairman and Chief Executive Jamie Dimon.

Johnson asked Dimon about his “tempest in a teapot” comment — the phrase he used to brush off early media reports of the multibillion-dollar losses, which have been attributed to a London-based section of the bank.

“When I made that statement, I was dead wrong,” Dimon told Johnson.

Sen. Tim Johnson asks Jamie Dimon, what did you know when you made your “tempest in a teapot” comment?

Dimon explained that when the trading issues first arose, he was assured by his lieutenants at the bank that it was an isolated incident.

Johnson also asked Dimon about the changes the bank made in its risk models in January, and also whether the bank’s compensation structure incentivized risk-taking and whether the trading debacle will lead to “clawbacks.”

Dimon said it’s “likely, though subject to board, that there will be clawbacks.”

At the start of the hearing, Dimon read his prepared testimony for the Senate hearing, in which he apologized for the bank’s mistakes and said JPMorgan’s trading loss happened because poorly managed traders in January started an unwise hedging strategy they did not fully understand.

You can watch his opening testimony here:

JPMorgan CEO Jamie Dimon testifies before the Senate Banking Committee on what went wrong at JPMorgan.