FBI Opens Investigation Into JPMorgan’s $2 Billion Loss
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WASHINGTON (CBSDC/AP) — The FBI has opened an investigation into the $2 billion loss incurred by JPMorgan Chase last week, CBS News has learned.
The announcement of the investigation comes the same day CEO Jamie Dimon survived a shareholder push to strip him of his title.
Investors have pummeled JPMorgan’s stock price since the loss was revealed. The stock lost 12 percent in two trading days and lost almost $20 billion in market value. It bounced back on Tuesday, rising 3 percent.
A law enforcement official told the Associated Press that the FBI’s New York office is heading an inquiry by the Justice Department into the JPMorgan loss. The official, who was not authorized to speak about the decision, spoke on condition of anonymity.
Treasury Secretary Tim Geithner said Tuesday that the recent $2 billion trading “helps make the case” for tougher rules on financial institutions, as regulators continue to implement the 2010 law aimed at policing Wall Street.
Geithner said that the Federal Reserve, the Securities and Exchange Commission and the Obama administration are “going to take a very careful look” at the JPMorgan incident as they implement new regulations like the so-called “Volker Rule,” which bans banks from making bets with firm money.
“The Fed and the SEC and the other regulators — and we’ll be part of this process — are going to take a very careful look at this incident of course, and make sure that we review the implications of what that means for the design of these remaining rules,” Geithner said at a Washington event hosted by the Peter G. Peterson Foundation.
Under review will be “not just the Volker Rule, which is important in this context, but the broader set of safeguards and reforms,” he added.
Geithner said that regulators will also examine capital requirements, limits on leverage and reforms in the derivatives markets.
“I’m very confident that we’re going to be able to make sure those come out as tough and effective as they need to be,” Geithner said. “And I think this episode helps make the case, frankly.”
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