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WASHINGTON: A top US bank regulator told lawmakers on Wednesdaythat "inadequate" risk controls at JPMorgan Chase led to a $2billion derivatives loss, as a top senator called for increasedscrutiny of Wall Street. Congress is holding a series of hearings on the disastrousderivative trading strategy reported by the bank last month thatsent shudders through the still-frail financial system. Thomas Curry, who heads the Office of the Comptroller of theCurrency (OCC), was in the spotlight for his organisation'soversight of the bank unit responsible for the loss. "The issue at JPMorgan Chase is one of inadequate risk management"within the chief investment office, Curry said when questioned bythe Senate Banking Committee. He said his agency is poring over audit reports and interviewingofficials both at JPMorgan and the OCC to establish "a detailedchronology of events" leading up to the disastrous loss. "Our analysis will focus on where breakdowns or failures occurred,"he said in his testimony. Curry told the packed hearing that while the massive loss affectsthe bank's earnings, it "does not present a solvency issue." JPMorgan Chase has some $1.8 trillion in assets, including $101billion in Tier 1 common capital, he said. But amid worries that so-called "too big to fail" banks likeJPMorgan were taking excessive risks that could damage the entirefinancial system, senators expressed concern that regulators weretoo lax in monitoring huge trades. "What did the comptrollers office know, and were you on top ofthings?" asked Richard Shelby, the committee's ranking Republican. Curry responded that his concern about the bank intensified inApril "as losses increased within the portfolio." The OCC focused on "managing and monitoring the bank's efforts tomitigate or de-risk that particular portfolio with the objective ofensuring there is a soft landing of that particular position," hesaid. The series of hearings - JPMorgan's chief executive Jamie Dimon hasbeen invited to testify before Congress twice later this month -comes amid fierce debate over the Volcker Rule, a potential newpolicy which would bar banks from trading with their own funds in abid to prevent them from taking dangerous risks while enjoyinggovernment guarantees. Banking Committee chairman Tim Johnson said he disagreed withcomplaints that new Wall Street reforms urge regulators "tomicromanage" banks. "To restore confidence in our financial system after the crisis, weneed more, not less, scrutiny of Wall Street's activities," Johnsonsaid. Senator Patrick Toomey and other Republicans argued that theVolcker rule would merely limit banks' abilities to manage risk,and would impede their free-market trading. "I'm very, very concerned that we have created a monster," Toomeytold the regulators. There were "over 100 examiners on the ground full time at JPMorganalone," he noted, and they still failed to spot and interdict thebank's alarming losses. He said capital was the essential tool to reduce systemic risk andprovide a buffer against banks that get in trouble. - AFP/de. The e-commerce company in China offers quality products such as Boiler Water Treatment Chemicals , China Cooling Tower Water Treatment Chemicals, and more. For more , please visit Dispersing Agent today!
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