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 Levin asks why the risk limits were outdated since 2009 and continually ignored and not fixed.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........
Michael Cavanaugh co CEO and Doug Braunstein; ex CFO
Cavanaugh: the losses were the results of acts and omissions, of various personnel, risk managers, traders, senior management, failed.
The firm has terminated personnel, clawed back compensation, and is reorganizing to restructure, new granular risk parameters, self assessment and implementing series of improvements and risk criteria.......
any future portfolio hedging documented and linked to asset it is hedging......continued improvement etc.
Braunstein: Vice Chairman of JPMC: will answer questions
Levin: OCC email of May 2010 telling the CIO [Drew] she needed to do a better job.
Just FYI did and exam of CIO, we had some concerns of overall governance of activities and pushback from CIO Drew: Investments decisions are made with the full understandings of management and Dimon. Levin: True?
Drew: yeah that's true.
Levin: According to OCC had to escalate the matter of the data cutoff
did the bank stop sending daily investment data
Braunstein: Two weeks by order from Dimon. Prior to restarting the data to have controls in place that the data would get to the regulators and only to the regulators.
Levin: did you tell the OCC the reason for stopping the data?
eating now, have to pause.
12:29 PM PT: Levin's in with OCC guys. I lost steam after the onion rings. I hope there is a transcript editor edition. I am not a very good typist. The main upshot is that Levin is alone. The chamber is empty except for the necessary attendees. I notice c-span is avoiding doing the wide pan that would show Levin as the only Senator........