ST. PAUL — Washington dealt a double blow Thursday to JPMorgan Chase as a Senate report accused its iconic chief executive of hiding information about a massive loss from regulators while the Federal Reserve unexpectedly said it had found a "weakness" in the bank's capital plans.
The announcements, both unveiled in the late afternoon, escalates the problems for JPMorgan, the nation's largest bank and arguably its most prestigious. Once viewed as the strongest bank to emerge from the 2008 financial crisis, the firm on Thursday watched its weaker rivals, Bank of America and Citigroup, sail through the Fed's examination.
Perhaps more pressing is a report from the Senate's permanent subcommittee on investigations, which plans to hold a hearing Friday to probe the behavior of current and former senior bank executives as they tried to contain the fallout from a series of damaging trades, initiated by a trader known as the "London Whale." The bets ultimately cost the bank about $6.2 billion.
The Senate report is the first to suggest that JPMorgan's chief executive, Jamie Dimon, was less than forthright with regulators as he learned of the mounting losses. To date, Dimon has acknowledged that the bank failed to manage its risks, which allowed the bad trades to persist.
The report takes the bank to task for hiding losses for three months last year, overstating the value of its trading positions and ignoring red flags. When regulators grew concerned, JPMorgan withheld information about the nature of the portfolio, Senate investigators say.
At one point, the bank was providing regulators daily profit and loss statements from its investment division so they could see what was going on. But Dimon put a stop to that. When one of his subordinates resumed the updates, "Dimon reportedly raised his voice in anger," the Senate report said.