JPMORGAN CHASE WHALE TRADES: A CASE HISTORY OF DERIVATIVES RISKS AND ABUSES

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basic reports on a timely basis, and how the OCC could have failed to notice, for two months,
that the reports had not arrived. Moreover, when the March VCG report was later revised to
increase the SCP liquidity reserve by roughly fivefold, that revised report was not provided to the
OCC until May 17. 1305
P&L Reports. Though the bank provided P&L reports for the CIO on a monthly basis,
they failed to break out the synthetic credit portfolio as a line item, which, the OCC explained,
made reviewing that individual portfolio virtually impossible. In addition to omitting any
mention of the SCP’s losses from the P&L reports supplied to the OCC, no senior bank official
provided any separate oral or written disclosure to the OCC about the SCP’s mounting losses.
For more than four months, the OCC remained uninformed about the hundreds of millions and
then billions of dollars being lost. Those losses totaled $100 million in January, increased by
$69 million in February, climbed another $550 million in March, and exploded with another $1.5
billion in April, producing a cumulative loss figure of $2.1 billion by the end of that month. The
OCC told the Subcommittee that losses of that magnitude should have been disclosed by the
1306
bank to the OCC Examiner-in-Charge.
For its part, the OCC did not insist on obtaining more detailed information about the SCP
until May 2012, after the bank told the OCC that the SCP had lost $1.6 billion, and that the bank
1307
would “make some comment” about it in a public filing due in a few days. The OCC
examiners then made multiple requests to the bank for SCP-level profit and loss data to monitor
SCP performance going forward. 1308 At the time, the OCC head capital markets examiner told
his colleagues, “[the] Bank will likely object to this.” 1309
That the OCC expected JPMorgan
Chase to resist providing data about a portfolio losing billions of dollars and raising questions
about the bank’s entire risk management system is disturbing evidence of not only the bank’s
resistance to OCC oversight, but also the OCC’s failure to establish a regulatory relationship in
which the bank accepted its obligation to readily provide data requested by its regulator.
1305 Subcommittee interview of James Hohl, OCC (9/5/2012); 5/17/2012 email from George Banks, OCC, to Fred
Crumlish, OCC, “CIO Valuation Summary Memo – March 2012 Months End Results REVISED,” OCC-SPI-
00035273 (“Just received a revised CIO March 2012 Valuation Summary …. Appears they are revised 1Q12
results?”).
1306 Id.
1307 5/4/2012 Email from Scott Waterhouse, OCC, to Fred Crumlish, OCC, CIO Synthetic Position, OCC-SPI-
00021853 (“Doug Braunstein and John Hogan called to provide an update on the CIO position. ... Current losses are
approximately $1.6 billion.”). SCP profit-loss reports indicate, however, that as of the day of the call, SCP
cumulative losses were actually $2.3 billion. See OCC spreadsheet, OCC-SPI-00000298, printed in a chart prepared
by the Subcommittee in Chapter IV.
1308 See 5/16/2012 email from Elwyn Wong, OCC, to Scott Waterhouse, OCC and others, “CSO1,” OCC-SPI-
00023929; 5/14/2012 email from James Hohl, OCC, to John Wilmot, CIO, “CIO P&L Reporting,” OCC-00004759
(stating that an OCC request for SCP P&L for prior five weeks was made on May 7, 2012 and repeated on May 14,
2012); 5/17/2012 email from James Hohl, OCC, to Fred Crumlish, OCC, “Not Getting CIO Daily P&L after only
one day,” OCC-00004540 (Mr. Hohl: “I got one CIO daily P&L distribution and then didn’t yesterday. I inquired
about it this morning, but haven’t heard back.”).
1309 5/7/2012 OCC email from Fred Crumlish, OCC, to Scott Waterhouse and others, OCC, “CIO information for
Wednesday,” OCC-SPI-00013737, (“[W]e haven’t historically gotten P&L from them [CIO] as we do the IB
[Investment Bank] .… However, I asked James [Hohl] to first, put in a request for more granular daily P&L on the
synthetic credit to help us prepare for Wednesday’s meeting, and, more generally, put out the request that going
forward we get daily P&L in a form such as they provide to (say) Ina Drew. Bank will likely object to this.”).