JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said traders in a London unit responsible for a $2 billion loss didn’t understand the risks they were taking and weren’t properly monitored.
“This portfolio morphed into something that, rather than protect the firm, created new and potentially larger risks,” Dimon said in prepared remarks ahead of his appearance tomorrow before the Senate Banking Committee. “We have let a lot of people down, and we are sorry for it.”
The strategy for reducing the portfolio was “poorly conceived and vetted,” Dimon said. “The strategy was not carefully analyzed or subjected to rigorous stress testing within CIO and was not reviewed outside” the division.
Government investigators are scrutinizing how long senior executives knew about the CIO’s swelling bets before the losses approached $2 billion. One focal point is why the CIO’s so- called value-at-risk formula used to calculate potential losses was altered in this year’s first quarter, cutting the reported risk by half.