Federal regulators maintained at a Senate Banking Committee hearing yesterday that investigations against JPMorgan Chase were ongoing, but that several factors, especially the funding of their agencies, would hamper their efforts.

This was the first confirmation by the heads of the Commodity Futures Trading Commission and the Securities and Exchange Commission, Gary Gensler and Mary Schapiro, that they were in fact investigating JPMorgan Chase over the Fail Whale trades, which have cost the firm at least $2 billion and potentially as much as $7 billion.

And the subjects of the investigations were pretty much expected. The SEC is looking at the public disclosures from JPMorgan Chase to see if they misrepresented their trading positions to investors. The CFTC is looking at the actual trades themselves, in a credit default swap index fund, to see if they evaded derivative oversight and perpetrated fraud in the derivative market.

Neither of the investigations have anything to do with the as-yet unofficial Volcker rule, for which the SEC and CFTC have rule-writing responsibilities. Both Gensler and Schapiro alluded to the fact that they would take the trades into account when finalizing that process, though neither said whether they believed the trade would be illegal under the Volcker rule or a permitted hedge.

For anyone who thought that hearings would offer an opportunity for the Senate to exercise responsible oversight over the financial industry, let me highlight this passage between Gensler and Sen. Richard Shelby, ranking Republican on the committee:

“When did you first learn about these trades?” Shelby inquired.

Gary Gensler, head of the Commodity Futures Trading Commission, admitted that he had learned about them from press reports.

“Press reports!” Shelby echoed, with mock surprise. He smiled. “Were you in the dark?”

Gensler tried to explain that his agency does not yet have authority to regulate the bank, but Shelby interrupted. “So you really didn’t know what was going on . . . until you read the press reports like the rest of us?” he asked again.

“That’s what I’ve said,” Gensler repeated.

But Shelby wanted him to keep saying it. “You didn’t know there was a problem there until you read the press reports?”

The implication is to discredit regulations that were never installed, due to bank lobbying and also a virtual defunding of the key regulatory agencies meant to implement Dodd-Frank. The CFTC and the SEC don’t have the funds to keep up with their expanded responsibility. And Shelby uses this as proof that the responsibility should be taken away.

Never mind the fact that the regulators are easily and often swayed by the bank lobbying campaigns as well. In fact, we see a prime example of that in JPMorgan Chase hiring the former head of enforcement of the SEC to represent them in the various regulatory investigations. I’m sure William McLucas speaks the same language as the other regulators, so to speak.

More hearings are scheduled, including one sometime in June with Jamie Dimon himself. But expectations should be reduced to the lowest possible setting.