Jp Morgan
March 15, 2013 Contacts: Tara Andringa 202-228-3685
Opening Statement of Senator Carl Levin (D-Mich.) U.S. Senate Permanent Subcommittee on Investigations Hearing on JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses March 15, 2013
Good morning. Let me begin by extending a special welcome to a longtime friend, the new Ranking Member of the Subcommittee, Senator McCain. This is not the first time we have worked side-by-side. I deeply appreciate the energy and bipartisan spirit Senator McCain brings to our work together on the Armed Services Committee when he was Ranking Republican there and now here on this Subcommittee. Like the Armed Services Committee, this Subcommittee has a tradition of bipartisanship, and I very much look forward to continuing our partnership here. In April 2012, Americans were confronted with a story of Wall Street excess and the derivatives disaster now known as the JPMorgan Chase whale trades. The largest U.S. banks today are deep into derivatives, complex financial instruments that derive their value from other assets. The derivatives behind the JPMorgan whale trades were part of a so-called “Synthetic Credit Portfolio” that essentially made outsized bets on whether particular financial instruments or entities were creditworthy or would default during specified time periods. The bets were made by traders in the London office of U.S. banking giant, JPMorgan Chase. Their trades – meaning their bets -- grew so large that they roiled the $27 trillion credit derivatives market, singlehandedly affected global prices, and finally attracted a media storm aimed at finding out who was behind them. That’s when the media unmasked JPMorgan’s Chief Investment Office (CIO) which, until then, had been known for making conservative investments with bank deposits. At first, JPMorgan’s CEO Jamie Dimon claimed the April media reports about the whale trades were “a tempest in a teapot.” But a month later, the bank admitted the
Opening Statement of Senator Carl Levin (D-Mich.) U.S. Senate Permanent Subcommittee on Investigations Hearing on JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses March 15, 2013
Good morning. Let me begin by extending a special welcome to a longtime friend, the new Ranking Member of the Subcommittee, Senator McCain. This is not the first time we have worked side-by-side. I deeply appreciate the energy and bipartisan spirit Senator McCain brings to our work together on the Armed Services Committee when he was Ranking Republican there and now here on this Subcommittee. Like the Armed Services Committee, this Subcommittee has a tradition of bipartisanship, and I very much look forward to continuing our partnership here. In April 2012, Americans were confronted with a story of Wall Street excess and the derivatives disaster now known as the JPMorgan Chase whale trades. The largest U.S. banks today are deep into derivatives, complex financial instruments that derive their value from other assets. The derivatives behind the JPMorgan whale trades were part of a so-called “Synthetic Credit Portfolio” that essentially made outsized bets on whether particular financial instruments or entities were creditworthy or would default during specified time periods. The bets were made by traders in the London office of U.S. banking giant, JPMorgan Chase. Their trades – meaning their bets -- grew so large that they roiled the $27 trillion credit derivatives market, singlehandedly affected global prices, and finally attracted a media storm aimed at finding out who was behind them. That’s when the media unmasked JPMorgan’s Chief Investment Office (CIO) which, until then, had been known for making conservative investments with bank deposits. At first, JPMorgan’s CEO Jamie Dimon claimed the April media reports about the whale trades were “a tempest in a teapot.” But a month later, the bank admitted the