Senate report increases pressure on JP Morgan Chase chief Jamie Dimon
Damning report outlining US bank's efforts to hide losses reopens 'too big to fail' argument
JP Morgan Chase's efforts to hide trading losses, outlined in a Senate report, will probably ignite debate over whether the largest US bank is too big to manage and increase pressure on chief executive Jamie Dimon to surrender his role as chairman.
Dimon misled investors and dodged regulators as losses escalated on a "monstrous" derivatives bet, according to a 301-page report by the Senate Permanent Subcommittee on Investigations.
The bank "mischaracterised high-risk trading as hedging" and withheld key information from its primary regulator, sometimes at Dimon's behest, investigators found. Managers manipulated risk models and pressured traders to overvalue their positions to hide growing losses.
The bank 'mischaracterised high-risk trading as hedging' and withheld key information from its primary regulator
"Too big to fail has been put back on the table - not providing risk data, misleading shareholders - this suggests that breaking up the banks is a viable idea," said Mark Williams, a former Federal Reserve bank examiner who teaches risk management at Boston University.
"This big trading loss reinforces the need for independence. It's kind of hard to argue at this point that JPM would've been worse if they had a separate chairman."
After nine months of investigation, the panel concluded on Thursday that JP Morgan had "a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public", panel chairman Carl Levin said.
His team combed through 90,000 documents and interviewed dozens of current and former executives.
