A harsh new report by the US Senate’s subcommittee on investigations says JP Morgan Chase misled regulators and investors about a $6.2 billion trading loss last year. The report says bank officials ignored growing risks, and understated the trading losses to federal examiners by hundreds of millions of dollars. In his initial comment about the losses, CEO Jamie Dimon called them a “tempest in a teapot.” Later he corrected himself.
The subcommittee’s chairman, Democratic Senator Carl Levin, said the report showed “many, many failures” at the nation’s largest bank, some of them “egregious.” The investigation spoke of secretive trades and creative bookkeeping as the bank tried to hide its losses. A spokeswoman for JP Morgan, quoted by The Guardian, said: “While we have repeatedly acknowledged mistakes, our senior management acted in good faith and never had any intent to mislead anyone,”
More criticism for JP Morgan Chase from the Federal Reserve. Chase and Goldman Sachs have both been told that their plans for maintaining proper capital levels are weak. Both firms have been ordered to revise their plans by the end of September. The Fed’s order is part of the results of stress tests – annual check-ups in which the government determines whether big banks can raise dividends for shareholders and buy back their own shares. The tests are meant to make sure the banks can withstand a severe recession. The Fed says it will allow JPMorgan and Goldman to go through with any dividend increases or share buybacks they may have requested. The Fed didn’t say what the banks had asked for. The Fed turned down similar requests from Ally Financial and BB&T.
The winning streak continues for stocks with a tenth straight day of gains for the Dow Jones index. Several economic reports today on prices, industrial production and consumer confidence may decide if there will be more gains. The broad based S&P 500 is now just 2 points from a record high.
Boeing executives say commercial flights of its grounded 787 Dreamliner jets will resume “within weeks, not months” with a third of safety tests already completed. Boeing chief project engineer Michael Sinnett admits the company hasn’t pinpointed the cause of the battery problems that led to the grounding of the entire fleet, but expressed confidence that the new design has layers of safeguards to prevent battery fires and overheating. The executives made the comments in Japan, where All Nippon Airways was the first customer to put 787 into service.
Myanmar, also known as Burma, is coming out of the shadows caused by decades of secretive military rule. This morning’s Wall Street Journal reports that Google Executive Chairman Eric Schmidt will fly to Myanmar next week, “a sign of the Southeast Asian country’s appeal to leading U.S. technology companies as it emerges from decades of secrecy and crippling western sanctions.” The visit would be the first by a top executive from a big US technology firm as it looks for new access to a market of 60 million people.
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesabc