JPMorgan ignored risk warnings, misled investors: Report

JPMorgan Chase & Co Chairman and CEO Jamie Dimon testifies before the House Financial Services Committee on Capitol Hill on June 19, 2012 in Washington, DC.

“I don’t know where he wants this to stop. But it’s getting idiotic.”

These are the words of the then-JPMorgan trader Bruno Iksil,  known as the "London Whale" for his risky trades, according to a new Senate probe.

Iksil presided over trades that lost some $6 billion. The report says the Whale wanted to cut losses and get out, but Bigger Whales, his managers, told him to keep betting.

Financial analyst Josh Rosner at Graham Fisher is co-author of Reckless Endangerment.

"The company helped to paint it as a  problem of traders, that they had thrown the traders overboard. And that, as Jamie Dimon has claimed, the Whale has been killed and harpooned," says Josh Rosner, a financial analyst at Graham Fisher and co-author of the book Reckless Endangerment. "And here we are finding well hold on it goes all the way to the front office."

According to the report, top managers at JPMorgan also barreled through internal stop signs warning of financial risk and hid losses from the public.

Rosner says the broader failure is risk controls at all banks. Today’s hearing focuses again on big banks and regulating them.

As a preview, one senator notes “they are not too big to jail.”

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.
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Its seems one hedge may be to up the ante so much you endanger the largest number of people you can. I love the picture I saw when the banks malfeasance was just coming to light. On John Stewart they a photo of an actor holding a gun to a bag of money labeled "your IRA".

It is unfortunate that you are editing the broadcast here rather than before they air. Don't know in which segment this occurred, since you aren't giving us verbatum here, but at the end of one, after dissing Daimon, Kai rhetorically made a typical idiotic flippant remark "why is JPM such a popular stock - must be because it is too big too fail." Shameful and shallow. When there have been bank bail outs, the previous shareholders have lost lots if not everything. Sure, for the brave who bought into the bottom, or held rather than sold, there was money to be made from that point forward, but one did not know if the bank would go bust or survive. Regardless, it did not bail out the shareholders, it bailed out depositors, borrowers (whose facilities would have been disrupted), and the financial system. No, JPM has been a successful investment during the past 4 yrs because it has done well and Daimon is well-regarded despite the major london whale screw-up.

As i heard Kai's unfortunate remark, i thought: it's about time i praise something after a string of criticism so sure hope he eventually does something right. Voila, his next story! See my comments on "american winter" segment.

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