JPMorgan’s Risk Controls Faulted

At Senate hearing, regulators criticize bank’s risk management practices.

JPMorgan Chase & Co.’s trading loss of more than $2 billion points to failures in the bank’s risk-management practices, U.S. regulators told lawmakers today.

Comptroller of the Currency Thomas J. Curry said the losses raise “questions about the adequacy and rigor” of the bank’s risk operation, particularly of the unit which experienced the losses, the chief investment office.

Capital Requirements

Fed Governor Daniel Tarullo said in his prepared testimony that the central bank has been assisting in the oversight of JPMorgan’s “efforts to manage and de-risk the portfolio in question.”

Substantive Guidelines’

Tarullo said the Volcker rule will put in place “substantive guidelines” to distinguish between hedging and proprietary trading.

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