Fed regulators in hot seat over JPMorgan loss
Reuters) - JPMorgan's $2 billion-plus (1.2 billion pounds) trading loss raises serious questions about whether the New York Federal Reserve and other regulators were asleep at the wheel or whether it is asking too much of them to keep up with the financial engineering conducted by complex institutions with diverse, global operations.
The discussion may have migrated from too big to fail to too big to manage and too big to regulate.
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The Fed ramped up the number of staff embedded at JPMorgan Chase & Co since the financial crisis, when the bank grew through its takeovers of much of the failed Bear Stearns and Washington Mutual. But so far it is unclear whether any of these regulators detected something high-risk and untoward going on in JPMorgan's Chief Investment Office in New York or in London.
The Fed has declined to comment on when it knew there was a problem or whether it played any role in alerting the bank. It will likely take some time to sort things out.
The U.S. central bank certainly cannot say it wasn't told that there were huge positions being built up by JPMorgan. Reports by the Wall Street Journal and Bloomberg in early April let everyone know that a JPMorgan trader, dubbed the "London Whale," was playing a dominant role in certain markets.
more: http://uk.reuters.com/article/2012/05/14/uk-jpmorgan-analysis-idUKBRE84D03620120514
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