As the price tag swells for JPMorgan Chase’s multi-billion-dollar trading loss, Jamie Dimon, the bank’s chief executive, offered an unvarnished message to employees yesterday.
JPMorgan, which is poised to pay roughly $800 million to a host of government agencies, is working to “face our issues, roll our sleeves, and fix” the compliance and control problems throughout the bank, Dimon said in a company-wide memo.
The brewing regulatory problems were on display on Monday when JPMorgan agreed to settle investigations from government agencies in Washington and London into the bank’s $6 billion blunder by traders in London. As part of the settlement, it will make a sweeping admission of wrongdoing.
The settlements, according to people briefed on the matter, will help the bank resolve investigations by the Securities and Exchange Commission, the Federal Reserve and the Office of the Comptroller of the Currency, which are focused on a breakdown in controls at the bank that allowed the trading losses to occur. The resolution extends across the Atlantic, too; JPMorgan will pay fines to wrap up the investigation by Britain’s Financial Conduct Authority into the soured trades.
Even as JPMorgan works to close a painful chapter in its history that included congressional hearings, the departure of senior executives and criminal charges against the traders at the heart of the losses, the bank has more work to do and should brace for more regulatory challenges, Dimon said.
As he works to shore up lax controls and root out lingering problems, Dimon explained how “we are aggressively tackling these challenges.” Dimon explained that strategy in his memo, including how the bank “deployed massive new resources and refocused critical managerial time” on the effort.
Refocusing the bank
A critical component of that effort, Dimon said, is refocusing the bank on core areas and exiting units like student-loan origination and most of the physical commodities sales and trading business. JPMorgan has ratcheted up its spending on controls, Dimon noted, increasing the "total spend on controls" to roughly $1 billion this year. Spending on technology that helps bolster controls has increased by 27 percent since 2011, Dimon said.
To proactively thwart any regulatory missteps, Dimon said the firm was "conducting an in-depth review" of its foreign correspondent banking business – an area that could pose regulatory headaches going forward.
– New York Times service
