JPMorgan Chase & Co. could have spotted trouble at its chiefinvestment office long before traders there racked up at least $2billion in losses. One reason it didn't: Chief Executive OfficerJamie Dimon.

Dimon treated the CIO differently from other JPMorgandepartments, exempting it from the rigorous scrutiny he applied torisk management in the investment bank, according to two people whohave worked at the highest executive levels of the firm and havedirect knowledge of the matter. When some of his most senioradvisers, including the heads of the investment bank, raisedconcerns about the lack of transparency and quality of internalcontrols in the CIO, Dimon brushed them off, said one of thepeople, who asked not to be identified because the discussions wereprivate.

Dimon's actions contrast with his reputation as a risk-aversemanager who demands regular and exhaustive reviews of every cornerof the bank. While Dimon has said he didn't know how dangerous betsinside the CIO had become, the loss on those trades calls intoquestion whether anyone can manage a financial empire as vast asJPMorgan, which became the biggest U.S. lender last year and nowhas more than $2.3 trillion in assets, larger than the economies ofBrazil or the U.K.

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