Geithner: Regulators Are Taking a Closer Look at JPMorgan’s Blunder
JPMorgan Chase’s (NYSE:JPM) $2 billion trading loss was a pretty significant risk-management failure that will prompt close scrutiny by regulators, according to Treasury Secretary Timothy Geithner. The Federal Reserve and the Securities and Exchange Commission will be among the regulators taking a closer look at the incident.
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On May 10, JPMorgan’s Chief Executive Officer Jamie Dimon announced the loss, saying that his firm’s handling of trading in synthetic credit positions was flawed, complex, poorly reviewed, poorly executed, and poorly monitored. The biggest U.S. bank will consider reclaiming incentive pay from employees, including former Chief Investment Officer Ina Drew.
The administration’s overhaul of financial regulations is not intended to prevent these kinds of mistakes from happening, but rather acts as a system to handle these inevitable mistakes when they do occur. Geithner said that the loss indicates the importance of these reforms being strong and effective.