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Saturday, October 1, 2016

June 14 (Bloomberg) — Did Jamie Dimon, the chairman and chief executive officer of JPMorgan Chase & Co., put too much blind faith in Ina Drew, the former leader of the bank’s Chief Investment Office who was responsible for a proprietary trade that cost the firm $3 billion and counting?

That is the central question that occurs to me after listening to Dimon alternately deflect questions from and charm the pants off the Senate Banking Committee on Wednesday in Washington.

Dimon, of course, did not address that question directly. But knowing how intently he has focused on risk-taking in JPMorgan’s investment bank, regularly attending its risk- committee meetings, and how indifferent he seemed to what Drew was doing — apparently never attending one of her group’s risk- committee meetings — one wonders whether he was too much in the thrall of his $15-million-a-year chief investment officer.

“I think the first error we made,” Dimon testified, “was that the CIO unit had done so well for so long” — making billions in dollars of profit over the years — “that I think there was a little bit of complacency about what was taking place there, and maybe there was overconfidence.”

He told the senators that the CIO had its own risk committee, which was “supposed to properly overview and vet all the risks,” but clearly that did not happen in the particular “synthetic credit portfolio” that incurred the losses. He said the synthetic credit portfolio should have “had more scrutiny. It was higher risk. It was marked to market. It should have had more scrutiny and different limits right from the start.”

We now know this did not happen. When Bloomberg News first reported on April 6 about the so-called London Whale — the nickname given to Bruno Iksil, the trader in JPMorgan Chase’s London CIO office who had constructed the fateful synthetic credit trade — Dimon dismissed the reporting as a “tempest in a teapot.” At the Senate hearing, on this point he was contrite: “Let me first say, when I made that statement, I was dead wrong.”

It turned out that Dimon had been traveling at the time, and called in to Drew as well as Doug Braunstein, the chief financial officer, and John Hogan, then the chief risk officer at the bank, and was told that they “were looking into it.” He told the senators, “I was assured by them, and I have a right to rely on them, that they thought this was an isolated small issue and that it wasn’t a big problem.”

Later in the hearing, after Senator Sherrod Brown, an Ohio Democrat, asked Dimon whether he monitored the CIO, he replied that generally he did. When Brown asked whether he approved of the CIO’s trading strategy, Dimon said, incredibly, “No. I was aware of it, but I did not approve it.”

  • William Deutschlander

    When you can borrow money from the government at 0% interest why not gamble, after all if we get hit with a loss, we will get our Republican Buddies to have the tax payers pay us back for our losses!

  • CPANY

    Congress is treating Dimon with kid gloves because he and his bank give a lot of money in campaign contributions.

  • howa4x

    This is a perfect example of plausible denibility, or as Alfred E. Neuman used to say “What me Worry”

  • He will never go to jail and will be back doing exactly the same thing next year. He has too much power over the people who are running the hearing. I ask this question; Why does the guy still have a job? Make him pay back what was lost. Take his home, his bank account, his cars and anything else he has of value – it is time these people start paying the prices of their mistakes – JUST LIKE EVERYONE ELSE DOES.

    • ObozoMustGo

      Elsa… I’d like to say that you’re not the sharpest knife in the block, but I’d be insulting dull knives! So I won’t say it.

      What JP Morgan does with their own money is none of your leftist nutjob, busy body’s business. So SHUT UP! Go get a job and work for your own damned living, you mendicant.

      Have a nice day!

  • ObozoMustGo

    The bank was trading on their own account and they lost their own money, not client money, unlike your favorite DemocRAT crookster, Corzine who stole customer money. It’s not even enough money to even drastically impact their bottom line for the year. It’s private business and you leftist morons just like making muchado about nothing so you can scream and bitch some more about how much you hate Wall Street. It’s just more of the same old crap out of the boringly stupid left and useful idiots at The Memo that work for Obozo’s campaign propaganda machine.

    Have a nice day!