A Senate panel report issued Thursday reveals that JPMorgan Chase, the largest U.S. bank, ignored growing risks, manipulated documents and hid trading losses from investors and federal examiners as it dealt with its growing losses, according to the Associated Press and other news outlets.
The scathing 301-page report was released a day before a Senate subcommittee plans to question bank executives and regulators at a hearing, the New York Times noted. The report alleges that JPMorgan Chase understated losses to regulators "by hundreds of millions of dollars" and dismissed questions raised concerning trading risks, the AP said.
The report -- based on more than 50 interviews and a review of 90,000 documents -- suggests that CEO Jamie Dimon and other top brass were aware of massive losses but that they still downplayed the risks publicly, and criticizes federal regulators for oversight that ended up letting the massive bank to proceed with risky bets, the AP and the Wall Street Journal said.
JPMorgan Chase “gambled away billions of dollars through risky and exotic trades, then intentionally hid its losses from investors and the public, showing complete disregard for risk management procedures and regulatory oversight,” said Sen. John McCain of Arizona, the subcommittee’s senior Republican, according to the AP.
Sen. Carl Levin (D-Mich.), the subcommittee’s chairman, said the investigation showed "many, many failures," some of them "serious and indeed egregious," the AP noted. Senate investigators "found a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public," Levin said, according to the Journal.
The findings by investigators will intensify the debate over how to monitor multifaceted Wall Street risk-taking, and it could "foreshadow a criminal case against employees at the heart of the troubled wager,” the New York Times wrote.
“While we have repeatedly acknowledged significant mistakes, our senior management acted in good faith and never had any intent to mislead anyone,” a spokeswoman for the bank said Thursday, according to the Times.
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The newspaper reported that a JPMorgan Chase trader known as "The London Whale" told a colleague last year that the estimated losses were "getting idiotic," a transcript of their phone conversation cited by the Senate subcommittee revealed. “I can’t keep this going,” the trader continued.
The bank's losses now total more than $6 billion, according to several news reports.