Whenever you lose more than $6 billion, it’s good to have a mascot to blame it on.
For JP Morgan Chase, that mascot is the London Whale.
The real name of the so-called London Whale, Bruno Iskil, is not important. It’s difficult, in fact, to even remember the name of Bruno Iskil, a credit derivatives trader. It’s catchier to just say, the London Whale did it. And that’s pretty much how the JP Morgan trading debacle story has run since last year when these massive trading losses became known.
This week, a Senate subcommittee came out with a damning, 300-page report, concluded that the nation’s biggest bank ignored risks, misled investors, battled regulators and danced around the rules as its iconic whale spouted losses.
Senators, being senators, are using this case as an example of why banks need more regulation.
“The JPMorgan Chase whale trades provide another warning signal about the ongoing need to tighten oversight of banks’ derivative trading activities,” the Senate report said.
JPMorgan Chase, however, has portrayed it as a horrible mistake. The bank more or less just got taken by a whale.
The former head of the bank’s Chief Investment Office Ina Drew blamed underlings when she went before the Senate panel today. It’s difficult, however, to imagine how underlings can trade away billions of dollars without anyone at the top noticing.
Republican Senator John McCain of Arizona said it best: “The traders seemed to have more responsibility and authority than the higher-up executives.”
Yes, Senator, but one of them was a whale, the largest mammal on the planet.
Click here to read the Senate report. And click here to read more about the hearing from Reuters.
And who is really to blame? Looks like the blame starts all the way at the top. Click here to read about the email that links CEO Jamie Dimon to the fiasco.