People have gotten fired for a lot less. And people have certainly gone to jail for what JPMorgan Chase execs did when they discovered that one of their traders in London had lost a quick $2.3 billion.
That infamous trader is known around Wall Street as the London Whale. His real name, Bruno Michel Iksil, only came out after he had thrust the bank into the spotlight.
Iksil’s losses eventually topped $6 billion, a shocking figure considering that JPMorgan was one of the banks that needed a huge taxpayer bailout during the financial crisis.
Yesterday, the Senate’s Permanent Subcommittee on Investigations grilled a team of sad-sack JPMorgan executives for misleading regulators about the extent of the company’s losses on these derivative trades by — essentially — cooking the books.
Jamie Dimon wasn’t one of those who testified. But Ina Drew, former head of the bank’s investment unit, did.
And after Drew gets finished cleaning up this mess, someone should hand her a broom so she can start sweeping the streets — a job for which she is more suited.
Subcommittee head Carl Levin, a Democrat from financially hard hit Michigan, led the hours-long interrogation. He read from company e-mails in which JPMorgan employees admitted to “tweaking” figures related to the amount of risk its portfolio was under.
Levin also pointed out the company thus misled shareholders and filed inaccurate financial reports with the government.
And, just so there’d be an exclamation point in this outrage, the subcommittee said it was common practice for JPMorgan to become incensed when regulators tried to take action against the bank.
But, you know what? JPMorgan will get away with everything.
Levin’s hearing was great political theater, but it simply won’t matter under current laws.
Despite new restrictions that are supposed to be placed on banks through something called the Volcker Rule, they will continue to do whatever they want.
The irony of the Whale’s situation is that part of the problem was the Volcker Rule. A source with knowledge of the JPMorgan situation said the bank let its guard down because the Volcker Rule was about to restrict speculative trading in the US.
Wall Street firms and their banking subsidiaries will continue to take risks. And when they stumble, the American taxpayer will have no choice but to give them a hand.