Regulator says JPMorgan has ‘serious risk management weaknesses’
WASHINGTON -- A key financial regulator said the investigation of the more than $2-billion trading loss at JPMorgan Chase & Co. has found the bank apparently has “serious risk management issues” that might go beyond the office responsible for the losses.
“We do believe as a preliminary matter that there are apparent serious risk management weaknesses at the bank,” Comptroller of the Currency Thomas J. Curry told the House Financial Services Committee on Tuesday.
The Office of the Comptroller of the Currency is the main regulator for JPMorgan Chase’s banking operations and is “continuing to examine the root causes for those failures and whether there are other weaknesses” outside the firm’s chief investment office, which conducted the trades that led to the losses.
Curry was among five financial regulators testifying at a hearing about JPMorgan’s trading loss. The bank’s chief executive officer, Jamie Dimon, was set to testify after the regulators.
Curry reiterated his testimony from a June 7 Senate Banking Committee hearing that the OCC was not aware of the risky trading by JPMorgan’s chief investment office until April, just weeks before Dimon announced the loss.
The OCC’s investigation is looking into whether internal bank reports were detailed enough to alert JPMorgan executives and regulators of the size and risk of the firm’s trading positions, Curry said.
“In hindsight, if the reporting were more robust or granular, we believe we would have had an inkling of the size and potential risk of the position,” Curry said.
The Federal Reserve also has oversight of JPMorgan, regulating the broader bank holding company. But Fed General Counsel Scott Alvarez said that dual supervision was not a factor in regulators’ inability to identify the losses earlier.
Instead, the problem was “more a breakdown in the risk management” at JPMorgan, has Dimon has admitted, Alvarez said.
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