Sept. 13 (Bloomberg) -- JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon overhauled leadership of the bank’s regulatory matters this year as U.S. examiners said they had lost trust in management, the Wall Street Journal reported.
Top examiners from the Comptroller of the Currency and the Federal Reserve told Dimon and the New York-based bank’s board of their concern in April, the Journal said, citing unidentified people familiar with the meeting. Around that time, Dimon assigned senior executives to handle separate elements of the firm’s regulatory burden, resulting in about 50 monthly meetings between those managers and watchdogs, it said.
JPMorgan is boosting legal reserves this year and committing more employees to handle risks, compliance and legal matters as it grapples with federal probes and regulatory orders. The U.S. is conducting criminal investigations linked to the bank’s energy-trading and mortgage-backed securities businesses as well as separate probes of hiring practices in Asia and a record trading loss in London last year.
The bank is making “a huge investment of people, time and money,” the newspaper quoted Dimon as saying in an interview. “But it will make us stronger in the long run.”
Dimon met with U.S. Comptroller of the Currency Thomas Curry in Washington this week to update the agency on the bank’s activities and its compliance with various regulatory orders, Bloomberg News reported Sept. 11, citing people with knowledge of the talks. Some of the bank’s board members also were in Washington and put in calls to regulators as JPMorgan tries to repair its relations with its supervisors, the people said.
Joe Evangelisti, a spokesman for the bank, declined to comment on the newspaper’s report. Spokesmen for the OCC and Fed didn’t immediately reply to messages left after business hours.
JPMorgan has devoted $21.3 billion to legal fees and litigation since the start of 2008, more than any other U.S. lender, and added $8.1 billion to reserves for mortgage buybacks, company filings show.
The firm will probably add about $1 billion to legal reserves in the fourth quarter, the newspaper said, citing people close to the company. Chief Financial Officer Marianne Lake told investors at a Sept. 9 conference that this quarter’s addition to legal reserves would “more than offset” about $1.5 billion of consumer reserve releases.
JPMorgan has added 3,000 employees to bolster internal controls and compliance, Lake said at the event. An additional 2,000 workers were assigned to the effort inside their business units, the newspaper said.
Dimon assigned each senior executive to a separate “control initiative,” such as anti-money laundering efforts, the newspaper said. Those people are accountable for results in their area, it said.
To contact the reporter on this story: David Scheer in New York at firstname.lastname@example.org