ANTIQUES SHOPS

* Says hedge morphed into something he will not defend

* Warns that badly crafted Volcker rule could hurt markets

* Says pay clawbacks likely, will decide after board review

* Dimon rejects notion that JPM was bailed out during crisis (Adds comments from Dimon and corporate strategy expert)

By Dave Clarke and David Henry

WASHINGTON, June 13 (Reuters) - JPMorgan Chase & Co Chief Executive Jamie Dimon told lawmakers that he could not defend how a hedging strategy in a London office morphed into a multibillion-dollar trading loss, but he still took swipes at regulatory reforms that he said fail to make sense.

The Senate Banking Committee was mostly gentle with the polished and relaxed banker at Wednesday's hearing, and did not force him to reveal whether the estimated $2 billion loss has significantly swelled.

Dimon apologized for the self-inflicted loss that he said started as a genuine hedge that would make the firm a lot of money if a credit crisis hit.

Lawmakers have questioned whether the trades were truly a hedge or a speculative bet that was hidden from shareholders and regulators.

"This particular synthetic credit portfolio was intended to earn a lot of revenue if there was a crisis. I consider that a hedge," Dimon said. "What it morphed into, I will not try to defend."

But Dimon was not so chastened that he backed off of his long-standing criticism of Washington reforms.

The 2010 Dodd-Frank financial oversight law, he said, has produced a swarm of uncoordinated regulators, and he warned policymakers that they must smartly craft the Volcker rule that will ban banks from making speculative bets with their own money.

Dimon said Washington must not overreact to JPMorgan's trading loss and create such narrow exemptions that it hurts financial markets.

"We have the widest, deepest, and best capital markets in the world. It would be a shame to shed that out of anger."

Michael Robinson, executive vice president at Levick Strategic Communications in Washington, said that Dimon was wisely apologetic about the trading loss and also held his ground during a few moments of tough questioning.

"Jamie Dimon tip-toed through the minefield and came out the other side. That's a victory." Robinson said.

Shares of JPMorgan, the largest U.S. bank by assets, appeared to get a boost from Dimon's appearance. In afternoon trading the stock was up 2 percent, outperforming the 0.3 percent rise in the KBW Bank Index.

The hearing got off to a rocky start, however, when a handful of protesters yelled out "Jamie Dimon is a crook" and "stop foreclosures now" before being escorted out of the cavernous hearing room.

'DEAD WRONG'

Dimon revealed during a surprise conference call last month that a hedging strategy in its London office had gone awry, producing at least $2 billion, and possibly $3 billion, in trading losses.

That was after Dimon in April dismissed as a "tempest in a teapot" news reports that Bruno Iksil, a trader dubbed the "London whale", had amassed an outsized position that prompted hedge funds to bet against it.

Dimon said he made that statement after senior executives and risk managers told him they thought any problems in the London Chief Investment Office were an isolated, small issue.

"When I made that statement, I was dead wrong," Dimon said.

The trading loss has renewed focus after the 2007-2009 financial crisis on whether big banks are too big to manage and has made some nostalgic for the repealed Glass-Steagall Act that separated commercial banking from more risky activities.

Dimon said the failed hedging strategy sprung from a firm-wide effort to reduce risky assets to prepare for the rollout of new capital standards agreed to as part of the international Basel agreement.

Dimon said the bank could have simply reduced the amount of these risky assets on its books but the CIO office instead, starting in mid-January, "embarked on a complex strategy" that involved adding positions traders believed could offset the existing risky assets.

In hindsight, the strategy created even more hard-to-manage risks in the synthetic credit portfolio.

The situation was not detected sooner, in part, because the CIO unit, also in January, changed its risk model in a way that disguised that the risk-taking had roughly doubled.

The firm did not disclose the risk model change in a timely manner, which experts said could be a focus of the Securities and Exchange Commission's investigation into the trading losses.

The Commodity Futures Trading Commission and FBI have also said they are looking into the losses.

WHAT DIMON KNEW

Dimon has said he was generally not aware of the CIO unit's activities, but revealed on Wednesday that he did receive a copy of a January memo that mentioned that the value-at-risk (VaR) model had changed.

"I was copied on a memo that said there was a change in the VaR model, so that is going to come out," Dimon said in a CNBC interview minutes after the hearing. "I paid virtually no attention to it."

He also said he did not learn before late April that the new model was badly flawed.

Dimon said repeatedly during the hearing that the bank's senior management failed by not detecting the London office's spike in risk, and said the bank will consider taking back pay from certain executives once the bank's board is done with their review. "I would say it's likely... there will be clawbacks," Dimon said.

Dimon said the lesson he learned from the trading debacle is, "Never, ever get complacent with risk."

BAILOUT BLUSTER

Senators asked about the state of the losses, but did not demand that Dimon give a detailed update on the portfolio, which JPMorgan is still unwinding. The bank is expected to provide more information to shareholders when it reports its second-quarter results in mid-July.

Dimon did say that the bank's "fortress balance sheet remains intact" and that he expects the second quarter to be solidly profitable.

Democratic Senator Robert Menendez seized upon Dimon's comments and reminded him that JPMorgan received $25 billion in federal support during the financial crisis.

"I think about the fortress balance sheet you talked about and I would like to remind you that the fortress balance sheet has a moat that was dug by taxpayers... So it seems to be that the American people are a big part of making your bank healthy," Menendez said.

Democratic Senator Jeff Merkley also pointedly reminded Dimon that JPMorgan, now the nation's largest bank by assets, received Troubled Asset Relief Program assistance during the financial crisis, which provoked a testy response from Dimon.

"I think you were misinformed. I think that misinformation is leading to a lot of the problems we are having today. JPMorgan took TARP because it was asked to by the Secretary of the Treasury of the United States of America," Dimon said.

Dimon is scheduled to appear before the House Financial Services Committee, along with bank regulators, on June 19. (Reporting By Dave Clarke, Alexandra Alper, David Henry and Aruna Viswanatha; Additional reporting by Rick Rothacker in Charlotte, N.C.; Writing by Karey Wutkowski; Editing by Tim Dobbyn)

June 13 - Fitch Ratings has affirmed Whirlpool Corporation's (NYSE: WHR) ratings, including the company's Issuer Default Rating (IDR) at 'BBB'. A full list of ratings follows at the end of this press release. The Rating Outlook is Stable.

WHR's ratings and Outlook reflect its position as the world's largest appliance manufacturer, with leading market positions in many regions. WHR's global operating platform, increased manufacturing efficiency and innovation capabilities have enabled it to improve its cost structure, compete more effectively around the world, and adjust to escalating material costs. Risks include intense global competition, volatility of raw material costs, sensitivity to business cycles, and ongoing regulatory and legal issues.

WHR's key credit metrics remain appropriate for the rating category. The company's leverage as measured by debt to EBITDA stood at 1.7x during the latest 12-month (LTM) period ending March 31, 2012, flat from year-end 2011 levels and up slightly from the 1.5x level reported at year-end 2010. Interest coverage was 7.0x during the LTM period ending March 31, 2012 compared with 7.0x for fiscal year 2011 and 7.3x for fiscal year 2010. Fitch expects these credit metrics to remain relatively stable during fiscal 2012.

Whirlpool's operating margins have been negatively affected by higher raw material costs, particularly for steel, plastic resins and base metals. Management estimates raw material costs will rise $300 million - $350 million in 2012. Nevertheless, the company reported improved margins during the first quarter of 2012 as cost-based price increases announced last year, as well as the benefits of business rationalization initiatives implemented in recent years more than offset the inflation in raw material costs. Fitch expects operating margins will improve slightly in 2012 compared to 2011 as higher prices and productivity improvements will continue to offset the inflation in raw material costs this year.

The near-term operating outlook for global appliance demand remains relatively stable despite continuing challenges in Europe, lingering difficulties in the U.S. housing market, and higher material and energy costs. In the U.S., Fitch expects appliance demand will increase slightly compared with last year's levels. Fitch currently projects U.S. housing starts will increase 11.2%, while new home sales will improve approximately 8% and existing home sales will grow 4% during the year. Home improvement spending in the U.S. is projected to advance 4.5% in 2012. Internationally, appliance shipments in Latin America and Asia are expected to show some improvement while demand in Europe will likely decline.

WHR has solid liquidity with cash of $583 million as of March 31, 2012, and no borrowings under its $1.725 billion revolving credit facility maturing in June 2016. Subsequent to the end of the first quarter, the company repaid $350 million of senior notes that matured on May 1, 2012 and issued $300 million of 4.7% senior notes due 2022. The company also has significant debt maturing over the next four years, with roughly $1.3 billion coming due between 2013 and 2015. While WHR has sufficient cash and revolver availability to repay debt coming due in the next few years, Fitch expects the company will again access the debt markets to refinance some of these upcoming debt maturities.

Fitch expects management will remain disciplined in prioritizing the uses of its cash and cash flow. Funding the business as well as pension contributions will be the primary uses of cash flow. Cash and cash flow will also be deployed to maintain dividends, fund remaining legacy legal liabilities and for debt reduction. Fitch does not expect Whirlpool to undertake meaningful share repurchases in the short term. The company has $350 million remaining under its current share repurchase authorization.

Fitch anticipates the company will be free cash flow (FCF) negative (cash flow from operations less capital expenditures and dividends) again during 2012, although at a slightly lower amount compared to the $226 million negative FCF realized during 2011. The negative FCF forecasted for 2012 is due primarily to the $275 million final installment to settle a Brazilian collection dispute, pension contributions of up to $250 million, $110 million for antitrust settlements and roughly $280 million of cash for restructuring initiatives.

The company has ongoing regulatory issues that could negatively affect the company's financial profile. In particular, there are antitrust investigations relating to WHR's compressor business. Government authorities in Brazil, Europe and the United States and other jurisdictions have entered into agreements with the company and concluded their investigations. In connection with these agreements, the company has incurred roughly $323 million of charges, of which $195 million remain accrued. The company has $171 million of installment payments (plus interest) remaining to be made to government authorities at various times through 2015. The company is also continuing to work toward a resolution of ongoing government investigations in other jurisdictions. Management indicated that it cannot reasonably estimate the amount it may incur and has not accrued charges relating to these ongoing investigations.

Fitch has affirmed the following ratings:

Whirlpool Corporation

--Long-Term IDR at 'BBB';

--Short-Term IDR at 'F2';

--Commercial paper at 'F2';

--Senior unsecured notes at 'BBB';

--Bank revolving credit facility at 'BBB' (Whirlpool Corp., Whirlpool Europe B.V., Whirlpool Finance B.V. and Whirlpool Canada Holding Company as borrowers).

Maytag Corporation

--Long-Term IDR at 'BBB';

--Senior unsecured notes at 'BBB'.

Whirlpool Finance B.V.

--Short-Term IDR at 'F2';

--Commercial paper (CP) at 'F2'.