“It puts egg on our face and we deserve any criticism we get,” Mr Dimon told analysts in a hastily arranged call after stock markets closed in New York on Thursday night.
He admitted the losses were linked to a Wall Street Journal report last month about a trader, nicknamed the 'London Whale', who, the report said, had amassed an outsized position which hedge funds were betting against.
The Journal reported that hedge funds were making bets in the market credit default swaps to try to take advantage of trades done by a French-born, London-based trader named Bruno Michel Iksil who worked out of the Chief Investment Office (CIO).
The CIO is an arm of the bank that JPMorgan has said is used to make broad bets to hedge its portfolios of individual holdings, such as loans to speculative-grade companies.
At that time, Mr Dimon said that the media coverage was “a complete tempest in a teapot”, but on Thursday he said the bank's loss had "a bit to do with the article in the press". He said: "I also think we acted a little too defensively to that."
Some of the losses have been offet by gains of about $1bn from the sale of other financial assets, according to the bank, which said that the division that made the trades will now lose about $800m this quarter.
The trading losses are an acute embarrassment for Mr Dimon who has led Wall Street’s fight against what banks have deemed excessive regulation in the wake of the financial crisis. Mr Dimon said that the set of trades, which includes credit default swaps, was designed to shield the bank from risk in the financial markets. “In hindsight, it was bad strategy, bad execution,” he said.
However, the scale of the losses will prompt renewed debate about the level of regulation that is needed to ensure the safety and soundness of the financial system. The chief investment office (CIO), the part of the bank that put on the trades, had moved from hedging risk to making speculative bets designed to reap profits for the bank, Bloomberg reported last month.
Carl Levin, a Democratic Senator who has pushed for tougher regulation of banks' trading, said that the loss "is just the latest evidence that what banks call 'hedges' are often risky bets that so-called 'too big to fail' banks have no business making." Mr Dimon said that the trading losses “plays right into the hands of a bunch of pundits”. He added: “That’s life.”
Shares in JPMorgan tumbled 5pc in extended trading in New York, wiping around $10bn off the bank's value.
JPMorgan was the only bank not to lose money during the financial crisis, and snapped up Bear Stearns for a bargain-basement price in 2008.
Mr Dimon refused to disclose any details about the trades that the bank had put on, but said that its focus was now on “maximising the economic value of these positions. We’ve got staying power and we’re willing to use it.”
The bank, which employs thousands of people in the City of London, generated a record $19bn in profits in 2011 due to an improving US economy.