Fed examiner rejig hurt JPMorgan supervision -NYTimes
NEW YORK, July 12 |
NEW YORK, July 12 (Reuters) - The replacement of dozens of New York Federal Reserve bank examiners at JPMorgan Chase & Co N> in mid-2011 hindered regulators' ability to see the mounting risks that left the bank with an estimated $5 billion of trading losses, the New York Times reported.
The regulator replaced "virtually all of its roughly 40 examiners" at the bank to bolster the team and prevent it from becoming too close to JPMorgan executives, the newspaper said, citing current and former government officials who spoke on the condition of anonymity.
The change of the regulatory guard was made over several months, but taxed the ability of the new crew to understand the bank, which has more than $2 trillion of assets on its balance sheet. At the time, JPMorgan's Chief Investment Office was increasing its bets on credit derivatives and changing a model for measuring risk in the unit.
The New York Fed and JPMorgan declined to comment, the paper said.
A JPMorgan spokesman declined to comment. Officials at the New York Fed did not immediately return Reuters' calls for comment.
JPMorgan announced on May 10 that it had lost $2 billion on the trades and CEO Jamie Dimon said the losses could increase by $1 billion or more.
On Friday, when the company reports its second-quarter financial results, Dimon has promised to give a more detailed account of the losses and how they happened. (Reporting by David Henry in New York; Editing by Bernadette Baum)
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