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JPMorgan Chase London Whale E: Supervisory Oversight

Author

Listed:
  • Arwin G. Zeissler
  • Andrew Metrick

    ()

Abstract

As a diversified financial service provider and the largest United States bank holding company, JPMorgan Chase (JPM) is supervised by multiple regulatory agencies. JPM’s commercial bank subsidiaries hold a national charter and therefore are regulated by the Office of the Comptroller of the Currency (OCC). Since the bank’s Chief Investment Office (CIO) invested the surplus deposits of JPM’s commercial bank units, the OCC was also CIO’s primary regulator. During the critical period from late January through March 2012, when CIO traders undertook the failed derivatives strategy that ultimately cost the bank $6 billion, JPM did not provide the OCC with required monthly reports that included CIO performance data and CIO’s internal reviews of the fair values assigned by traders to their derivative positions. However, OCC supervisors also failed to request the missing data, and thus found themselves surprised by the April 6 news stories unmasking the London Whale.

Suggested Citation

  • Arwin G. Zeissler & Andrew Metrick, 2014. "JPMorgan Chase London Whale E: Supervisory Oversight," Yale School of Management YPFS Cases 54849, Yale School of Management.
  • Handle: RePEc:ysm:ypfswp:54849
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    File URL: http://som.yale.edu/download-ypfs/001-2014-2E-V1-JPMorgan-E-REVA.pdf
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    Cited by:

    1. Chernobai, Anna & Ozdagli, Ali K. & Wang, Jianlin, 2016. "Business complexity and risk management: evidence from operational risk events in U. S. bank holding companies," Working Papers 16-16, Federal Reserve Bank of Boston.

    More about this item

    Keywords

    Systemic Risk; Financial Crises; Financial Regulation;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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