Bloomberg reports that the OCC described the lapse in a report sent in last year’s second half to the Senate Permanent Subcommittee on Investigations, said two people, requesting anonymity because the discussions aren’t public.
The congressional panel is set to release its own findings in coming weeks after examining how JPMorgan and regulators handled the bank’s botched trades, which lost more than $6.2bn during nine months of 2012.
The senators undertook a sweeping inquiry into how JPMorgan and regulators handled the trading debacle, which distorted markets and helped cut as much as $51bn from the bank’s market value last year. The lawmakers’ report will criticize the bank and the OCC for lax oversight of the trades, two people with knowledge of the matter said last month.
The OCC, which oversees national banks, didn’t catch a January 2012 change in the way JPMorgan calculated so-called value-at-risk, or VaR, for its chief investment office, where losses occurred, one of the people said. The new VaR model, which was later scrapped, cut the firm’s reported risk in half and ultimately exacerbated losses by underestimating their potential size as they began to mount, Chief Executive Officer Jamie Dimon told lawmakers in June.
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