has a nice proper accent and I didn't really absorb his statement of excessions of risk blah blah blah. His bald head is shiny and he is thin. Ina Drew showed up in a fabulously expensive get up and stated her CV and seems to be a bit mousy, not what I'd expect from a MOTU. Pete Wieland former head of Market Risk at JPMCB looks really nervous, I think is he squeezing his hands together under the table, hard.
Nobody knows who the actual person was who signed [stuff].
There are only 3 Senators around. Levin, McCain and Ron Johnson, who has to leave. This chamber is pretty empty. Johnson is asking the TBTF questions. Bacon says he doesn't believe they were operating on a TBTF basis but that the sitution was such that nobody understood it. [!] But "we're trying to understand it and promise to be good. and sensible.and granular. I am thinking he looks like a thin Despicable Me.
Ron Johnson has left the building mumbling something about how this TBTF stuff should be thoroughly investigated.......and stuff.
MCain takes over and is surprisingly calm.
Bacon: We relied on the "new VAR model" which was wrong, [ Duh! ] McCain asks what he's supposed to say at his next town hall meeting......
Bacon: regrettable. management failure.
McCain: Do you believe JPM is TBTF?
Bacon: No,....... [various weasel words but in a contrite manner.] I almost like the guy, because of the accent I suppose.
Levin on the bogus VAR models and graphic breaches jumping: asks about whether Weiland would agree whether huge jumps in risk level breaches was troublesome.
Weiland looks pained. He errs and says he thought the breaches were a good thing while they under discussion and allegedly being fixed. Levin asks why the risk limits were outdated since 2009 and continually ignored and not fixed.
Drew says it was handled by "Risk" and was in transition. Levin moves to impeach one of Drew's prior statement and says she misunderstood because of her unawareness of global standards. Levin then asks if she was aware if these limits were to be reviewed/ revised every year and did she know the risks went over 1000?
Drew: No, I did not know. [What? What are you getting paid for? There's no way I believe her, she was the CIO, that's what they do.]
Levin: New VAR with limited back testing and insufficiently analyzed results that were submitted and cut risks in half. What do you think about a new VAR model that drops risk levels overnight? [to Bacon].
Bacon: Absolutely not the way to do it.
Levin: New VAR composed of model using faulty manual input data entry every night for over $300B derivatives portfolio.
Drew: Very disappointing. Independent risk group were doing it, PHds, etc.[not my problem, sorry]
break. I may babble on about the rest of it when they reconvene........
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