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JPMorgan's "London Whale" had been making mega trades for years



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In other words, the myth about Jamie Dimon and JPMorgan being risk experts was a load of dog dirt all along. Is this really a surprise for anyone outside of the boot licking Wall Street cheerleaders media? Wall Street is full of ego and BS specialists, which is fine, when it's their own money and governments aren't bailing them out to save a country. It's a much greater problem when we have public policy that bends to their every desire.

We really need to forget about Dodd-Frank and go far beyond that. Bring back Glass-Steagall, which worked well for decades until Clinton and the GOP ripped it apart. Bloomberg:

Iksil’s value-at-risk, a measure of how much a trader might lose in one day, was typically $30 million to $40 million even before this year’s buildup, said the person, who wasn’t authorized to discuss the trades. Sometimes the figure, known as VaR, could surpass $60 million, the person said. That’s about as high as the level for the firm’s entire investment bank, which employs 26,000 people.

Investigators are examining how long senior executives knew about Iksil’s swelling bets at the chief investment office before losses approached $2 billion. One focal point is why the formula used to calculate Iksil’s VaR was altered early this year, cutting the reported risk by half. The change followed an internal analysis in late 2011 and was approved by top risk executives, said a person close to the bank. About the same time, half a dozen managers typically involved in such decisions moved to new jobs.
“If it was something that had that large an impact, it would have to be agreed to at the very-most-senior level within risk management,” probably including the bank’s chief risk officer, said Steve Allen, a former head of risk methodology for JPMorgan who retired in 2004. “You’re not going to make a change of that magnitude on the basis of one risk manager."


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