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Regulator unaware of jpmorgan loss until weeks before disclosure by 123wert sdfsf
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Regulator unaware of jpmorgan loss until weeks before disclosure |
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WASHINGTON — The top U.S. bank regulator had no inkling of JPMorgan Chase & Co.'s more than $2-billion trading loss until just weeksbefore it became public — even though the agency had 65examiners working full-time at the firm's Manhattan headquartersand other company offices. To some lawmakers, the acknowledgment was another black mark forthe Office of the Comptroller of the Currency , which has been criticized for not being more aggressive in itsoversight of major financial institutions in the years before thefinancial crisis. "The OCC has a well-deserved reputation for being too cozy with thebanks it regulates," Sen. Robert Menendez (D-N.J.) told Thomas J.
Curry, the agency's new chief, at acongressional hearing Wednesday. "Did the OCC screw up in allowingthese JPMorgan trades to happen?" Curry, who took over as comptroller in April, told the SenateBanking Committee that he was trying to determine that. The OCC is conducting a "critical self-review," Curry said, tofigure out where its oversight went awry, even as it works dailywith JPMorgan executives to reduce the risks in the complex tradingportfolio that caused the losses. Besides looking at those trades by JPMorgan's chief investmentoffice in London, the unit responsible for the loss, the OCC isassessing the bank's overall risk management, Curry said. "Part of my goal in reviewing what happened at JPMorgan Chase isnot just to see what the bank itself did or did wrong, but also howwe can improve our supervisory processes at the OCC," Curry said.
Last month's trading loss shook Wall Street, damaged the glitteringreputation of JPMorgan Chairman Jamie Dimon and raised the prospects of stiffer federal regulations beingenacted to prevent banks from making huge bets on complexsecurities. The committee is examining the JPMorgan trading loss as part of itsoversight of the 2010 financial reform law, which was designed toprevent excessive risk-taking by banks. Many provisions are stillbeing implemented by regulators, including the so-called VolckerRule to limit trading that banks do with their own funds. Dimon will testify before the committee next week and before theHouse Financial Services Committee the following week.
"When a bank with JPMorgan's solid reputation announces that itlost billions of dollars on a large trade reportedly designed toreduce the firm's risks, it reminds us that no financialinstitution is immune from bad judgment," said Banking CommitteeChairman Tim Johnson (D-S.D.) "While the JPMorgan trading loss does not appear to have causedsystemic problems, it is a clear reminder that Wall Streetcontinues to need better risk management, vigorous oversight and,if the rules are broken, unyielding enforcement," he said. But the focus at Wednesday's hearing was squarely on bankingregulators. Although JPMorgan's chief investment office created the complextrading portfolio in 2007, the OCC did not begin focusing on thepotential problems until early April — just weeks beforeDimon announced the huge losses May 10. "Our interest and concern intensified during the month as lossesincreased within the portfolio, up to the point that theinstitution itself announced the significance of the losses thatoccurred," Curry said. The Federal Reserve , which regulates JPMorgan's bank holding company, has been workingwith the OCC to help the firm remove the risk from the portfolio.
It's still unclear exactly what happened with the portfolio, whichwas supposed to help offset the credit risks of the bank, Currysaid. "It's a very complicated investment strategy, both in terms of itssize and complexity," Curry said. "We are looking to determine whatthe actual strategy behind that investment scheme was and also ifthere were any other factors driving that strategy other thanattempting to mitigate known risks in that portfolio." Sen. Jeff Merkley (D-Ore.) asked Curry whether Bruno Iksil, the JPMorgan traderknown as the "London Whale" for the giant bets he placed as part ofthe portfolio strategy, was trying to mitigate risk. "Not necessarily," Curry said.
Merkley agreed, saying Iksil "woke up each day … trying tomake money for the bank." Menendez warned regulators that if similar trading losses continueat banks after new financial rules are implemented, then "bloodwill be on all of your hands if the 'London Whale' ultimately goesbelly up next time." Sen. Richard Shelby (R-Ala.) said that banks need to take risks, but that regulatorsneed to make sure the firms don't go too far. "Job creation and economic growth depend on banks taking suchrisks," Shelby said. "It is the job of regulators, however, toprevent banks from taking risks that expose taxpayers." But Sen. Bob Corker (R-Tenn.) said it was not realistic to think banking regulatorscould prevent complex trades like the ones that caused JPMorgan'sloss.
"I think it's a fool's errand to think regulators are going to beahead of bankers," he said. jim.puzzanghera@latimes.com. I am a professional writer from Hot Water Bottles, which contains a great deal of information about swivel wheel stroller , water storage barrel, welcome to visit!
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