Task Force Report on JPM CIO Losses

polysena · Post by **polysena** » Fri Mar 15, 2013 11:07 am

Ah thank you for posting that, this report is extremely transparent and thus useful reading.

It is all deja vu issues encountered in that kind of "losses"... With respect to the ping pong game looking for the "responsible", it always strikes me how important the role of the management "psychology"is: if one does not abide by what one's manager says one is to do- one is out-of-the-firm, and if the manager is also pressed up by his hierarchy, he selects the optimal shut up and do what you are said strategy. When it goes wrong the waterfall is reversed: oh but I believed what my guys were telling me... Ultimately it is all again about- people, expertise and bravery vs salary & bonuses.. sound like good old Soviet Union.

The US Senate themselves should investigate themselves as well for their setting priorities elsewhere for their distrust to Basel rules that conduct them to refuse to implement IN or even ahead of time the Basel rules- esp. for that bank... in this very case, these would have spotted some of the issues framed...in particular the massiveness of the accumulated position(s), which would have indicated that the strategy pursued to reduce capital charges (in market risk rules the wording is capital charge not really RWAs) was just plainly non optimal, leaving open the weaknesses detected during the crisis is "backward foolhardy".

purbani · Post by **purbani** » Fri Mar 15, 2013 11:19 pm

Jamie Dimon Email Directly Ties JPMorgan CEO To $6.2 Billion Fiasco

"On January 23, the risk management group emailed the chief executive to ask for the authority to temporarily raise the bank’s overall risk limit. The same email informed Dimon that the CIO "has developed an improved" risk model that would cut the CIO's measurement of risk by nearly half. Dimon wrote back to approve the change, according to the report."

To me this is the crux of the matter

Has anyone else here ever built a model that halved their apparent risk and then bet the ranch on it without having it very thoroughly checked ?

People make mistakes, I have made many, and we know that all models are wrong in an important sense. But for a trade of this size to have been able to be "bottom-drawed" or "mismarked" for several months without any alarms going off or the explicit knowledge and indeed collusion of several people speaks to a very poor system.

Either way it seems to be a question of whether or not there was intent or simply widespread incompetence.

purbani · Post by **purbani** » Sat Mar 16, 2013 11:59 pm

For the sake of completeness

Senate Hearing transcripts and supporting materials

purbani · Post by **purbani** » Fri Mar 22, 2013 11:05 pm

JPMorgan Board Says Dimon Should Remain as C.E.O. and Chairman JPMorgan Chase's board said on Friday that it was standing behind Jamie Dimon, the bank's chairman and chief executive, amid calls from some investors that the two jobs be split. In the bank's proxy filing, the 11-member board said that Mr. Dimon should continue to hold both positions, as he has since 2006. "The board has determined that the most effective leadership model for the firm currently is that Mr. Dimon serves as both," the filing said. In the wake of a multibillion trading loss that roiled the bank's executive ranks, some investors have been agitating for JPMorgan Chase to separate the roles. In February, a vocal group of shareholders, including the American Federation of State, County and Municipal Employees and pension funds in New York and Connecticut filed a resolution to divide the chairman and chief executive posts.