JPMorgan Spending $4 Billion On Oversight

JPMorgan Spending $4 Billion On Oversight
Joe Mabel [CC BY-SA 3.0], via Wikimedia Commons

JPMorgan Chase & Co. (NYSE:JPM) plans to spend an additional $4 billion and add 5,000 more employees to strengthen its risk and compliance initiatives.

JPMorgan Spending $4 Billion On Oversight

Monica Langley and Dan Fitzpatrick of The Wall Street Journal feel the initiatives aim to protect the nation’s largest bank by assets from regulatory scrutiny ranging from trading oversight to mortgage-bond sales to overseas-hiring practices.

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$18 billion legal expenses since 2008

JPMorgan Chase & Co. (NYSE:JPM) has spent over $18 billion in legal expenses since 2008, much greater than any other U.S. bank, as evidenced in an analysis by FBR Capital Markets.

The banks is operating under four regulatory enforcement actions besides facing at least seven separate investigations by the Justice Department, with investigators probing activities the bank has done during housing downturn and financial crisis.

Lost trust in managementJP Morgan Spending $4 Billion On Risk And Compliance Oversight

Citing known sources, The Wall Street Journal reports during April examiners from the Office of the Comptroller of the Currency and the Federal Reserves told Mr. Dimon and his board that they had lost trust in management.

Mr. Dimon has since assimilated most senior executives and given charge of risk, legal and compliances with greater autonomy. Besides, the top compliance officer reporting lines shifted to report directly to the bank’s chief operating officer.

JPMorgan London Whale

Recently JPMorgan Chase & Co. (NYSE:JPM) also announced its intention to induct Linda into its board to strengthen the bank’s risk management oversight after the London Whale episode.

The London Whale episode has already cost the bank over $6 billion in losses. Besides JPMorgan Chase & Co. (NYSE:JPM) is currently negotiating settlements with several agencies that could involve penalties up to $600 million.

String of initiatives

Recently, Mr. Dimon has assigned each major executive a company-wide ‘control initiative’, such as anti-money-laundering and an annual regulatory assessment of the bank’s ability to weather a future crisis.

Besides, this week the bank reported that it would induct 3,000 people to the bank’s control staff to work on legal and regulatory matters.

Monica Langley and Dan Fitzpatrick of The Wall Street Journal also note the bank has provided about 750,000 hours of training on regulatory and control issues. While unveiling its results for the first half of the year, the bank has also disclosed that it spent $1 billion to add to legal reserves besides disclosing its intention to spend an additional $1.5 billion during the third quarter.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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