JPMorgan Chase reportedly cooked up data in connection with its $6bn (£4bn) trading losses, claimed the US Senate panel Republican John McCain who was investigating the affair. JPMorgan was under fire as the 300-page Senate report published findings into the trading, risk management failures and subsequent disclosures that marked last year’s so-called “London whale” episode. The report adds to the dampening effect caused by 17,000 job cuts announced a few weeks ago.
The 300-page report alleges that JP Morgan hid losses, did not share information with its regulators, and misled the public. The report also blames the bank’s regulator, the Office of the Comptroller of the Currency, and recommends reforming the way regulators oversee derivatives, the complicated financial instruments that played a role in the Whale trades and the financial crisis.
The report on JPMorgan quotes an examiner at the Office of Comptroller of the Currency (OCC), JPMorgan’s regulator, saying he felt the bank had “lied to” and “deceived” the agency over the question of whether the bank had mismarked its books to hide the extent of losses. It also reveals that the OCC lowered its “CAMELS” measure of bank strength, a key and usually secret metric, due to concerns over management and internal “oversight deficiencies”.
The Senate report on JPMorgan Chase revealed disclosures made by Jamie Dimon, chief executive of JPMorgan, and Doug Braunstein, who resigned as chief financial officer after the affair drew attention. Jamie Dimon had initially downplayed the significance of credit derivatives trading activity in the bank’s London chief investment office during an earnings call in April last year, saying it was “a tempest in a teapot”.
The investigative report found that he was “already in possession of information about the . . . complex and sizeable portfolio, its sustained losses for three straight months, the exponential increase in those losses during March and the difficulty of exiting the . . . positions”. Additional disclosures from Doug Braunstein, now a vice-chairman at the bank – including that regulators were given “information on those positions on a regular and recurring basis” – are described in the report as “inaccurate at best, and deceptive at worst”.