JPMorgan Models Get Regulatory Spotlight
Regulators have stepped up scrutiny of JPMorgan Chase & Co.'s internal controls by asking the bank to demonstrate that its risk models are designed and working properly, the Wall Street Journal reported today. The Office of the Comptroller of the Currency, the bank's primary regulator, has requested reviews of models that measure the possible effects of everything from trading losses to interest-rate moves. A change in one of these models contributed to losses in the bank's Chief Investment Office, a once-obscure unit that manages $370 billion in excess cash. The change effectively increased the amount of risk traders were allowed to take. JPMorgan's CIO unit was responsible for trading losses of more than $2 billion.