[ by Howard Haykin ]

The new Senate report released Thursday night, concludes that JPMorgan Chase ignored internal controls and manipulated documents as the nation’s biggest bank racked up $6.2 billion in trading losses last year.  The report further criticizes JPMorgan Chief Executive Jamie Dimon for having briefly withheld some information from regulators.

[C-I Note:  Mr. Dimon's explanations have made no sense - his claims that he had ceded control on such an important trading desk.  Jamie Dimon is cut from an older mold - due largely to the influence of his mentor, Sandy Weil - in which he serves as a hands-on executive.  Mr. Dimon, better than other executives, knows the reputational and monetary costs that accompany irresponsible actions. 

C-I has contended from the outset that JPMorgan - on Jamie Dimon's authorization - permitted the Chief Investment Office to take on the oversized positions - that led to the $6.2 billion losses - because that the CIO desk had a successful track record of capital gains on transactions.  It's a good play to let a hot trader (or in craps, a hot shooter) play on until either they incur a significant loss or the market and/or economic conditions dictates the need to pass on a certain trading strategy - at least for the time being.

Perhaps Mr. Dimon had a lapse in judgment when he did not instruct the CIO trader to close out his positions and take existing losses - rather than try and go "double/triple or nothing".  Or perhaps, Mr. Dimon was blind-sided by his lieutenants who provided an overly optimistic status report on CIO's trading positions - that influenced Dimon to stay the course on the trading strategy.  Had the optimistic status report been accurate, it's possible or probable that Dimon was correct to allow the CIO to continue its trading strategy - in order to pull another win by reversing existing losses, or even turning a profit.

However, like the Madoff Ponzi scheme, where we have never gotten any viable explanations for the missing billions in investor funds, we may never get learn what really happened at JPMorgan Chase in the London Whale affair.]

The findings by Senate investigators shed new light on the $6.2 billion trading blunder, which has claimed the jobs of some top executives and prompted investigations by authorities. The 300-page report, released yesterday, will escalate the debate in Washington over regulating Wall Street.

A Senate subcommittee is questioning bank executives and regulators in a hearing that began at 9:30 A.M. Friday. DealBook is live-blogging the hearing.
 

To access the  live blogging, go to:   [ Dealbook Senate Hearing Coverage, 3/15/13 ].