The nation’s largest bank hid high-risk derivatives trading that ran up $6.2 billion in losses by inflating trade values, dodging federal regulators and misinforming investors and the public about the dicey strategy, a scathing new congressional report charges.
The so-called London Whale trades in early 2012 by JPMorgan Chase were so large that they roiled world credit markets, despite bank CEO Jamie Dimon’s initial and since withdrawn dismissal of the losses as a “tempest in a teapot,” the Senate Permanent Subcommittee on Investigations reported Thursday in a 301-page analysis that disclosed new details of the financial debacle.
The bank’s use of federally insured deposits for part of the risky trades reprised some of the questionable financial practices that led to the national recession, the report concluded. The bank said Thursday “while we have repeatedly acknowledged significant mistakes, our senior management acted in good faith and never had any intent to mislead anyone.”
The Senate panel is scheduled to question current and former JPMorgan Chase officials, along with federal regulators, at a Capitol Hill hearing today. Four bank employees involved in the trading ducked Senate subpoenas by arguing they lived outside the U.S.
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