Jamie Dimon is slated to testify on JPMorgan’s recent $2.3 billion (and counting) in trading losses at a Senate Banking Committee hearing tomorrow, and his prepared remarks are getting around. It’s banal stuff, and if you want to know just how banal, a good test would be to read Mr. Dimon’s testimony against those freewheeling prose stylists at Bloomberg News, which published a 3,500-word takeout on JPMorgan’s chief investment office losses last night.
Dimon: “In hindsight, CIO’s traders did not have the requisite understanding of the risks they took. When the positions began to experience losses in March and early April, they incorrectly concluded that those losses were the result of anomalous and temporary market movements, and therefore were likely to reverse themselves.”
Bloomberg: “[JPMorgan risk manager Peter] Weiland compared efforts to reduce Iksil’s outsized position to the difficulty of trying to safely land a Boeing 747 without flying lessons, one executive said. The position was so large and illiquid, Weiland said he couldn’t get the plane below 35,000 feet, the executive said.” [Weiland declined to comment.]
Dimon: “The risk limits for the synthetic credit portfolio should have been specific to the portfolio and much more granular, i.e., only allowing lower limits on each specific risk being taken.”
Bloomberg: “So-called stop- loss limits, which were supposed to trigger an internal review or require a trader to immediately exit a position if losses grew too large, weren’t always enforced, the executives said.”
Dimon: “Personnel in key control roles in CIO were in transition and risk control functions were generally ineffective in challenging the judgment of CIO’s trading personnel. Risk committee structures and processes in CIO were not as formal or robust as they should have been.”
Bloomberg: “The position of chief risk officer inside the CIO was a revolving door, with at least five executives holding the job in six years, according to people familiar with the matter.”
Dimon: “CIO, particularly the synthetic credit portfolio, should have gotten more scrutiny from both senior management and the firmwide risk control function.”Bloomberg: “Dimon treated the CIO differently from other JPMorgan departments, exempting it from the rigorous scrutiny he applied to risk management in the investment bank, according to two people who have worked at the highest executive levels of the firm and have direct knowledge of the matter.”
So you know, here’s hoping Mr. Dimon goes off-script.