Scores of federal regulators are stationed
inside JPMorgan Chase’s
Manhattan headquarters, but none of them were assigned
to the powerful unit that recently disclosed a multibillion trading loss.
Roughly 40 examiners from the Federal
Reserve Bank of New York and 70 staff members from the Office of the
Comptroller of the Currency are embedded in the nation’s largest bank.
They are typically
assigned to the departments undertaking the greatest risks, like the structured
products trading desk.
Even as the chief
investment office swelled in size and made increasingly large bets, regulators
did not put any examiners in the unit’s offices in London or New York,
according to current and former regulators who spoke only on condition of anonymity.
Senior JPMorgan
executives assured the bank’s watchdogs after the financial crisis that the
chief investment office, with hundreds of billions in investments, was not
taking risks that would be a cause for concern, people briefed on the matter said.
Just weeks before the
trading losses became public, bank officials also dismissed the worry of a
senior New York Fed examiner about the mounting size of the bets, according to
current Fed officials.
The lapses have
raised questions about who, if anyone, was policing the chief investment office
and whether regulators were sufficiently independent. Instead of putting the
JPMorgan unit under regular watch, the comptroller’s office and the Fed chose
to examine it periodically
No comments:
Post a Comment