22.05.2012
By Simon Miller
The Commodity Futures Trading Commission (CFTC) is investigating JP Morgan's $2bn (£1.24bn) losses the chairman of said today.
Speaking the Senate Banking Committee, CFTC chairman Gary Gensler confirmed that it was looking at how JP Morgan lost $2bn through its Chief Investment Office which made bets on its credit default swap positions.
The CFTC is the latest agency to look at the losses as Securities and Exchange Commission (SEC) and the FBI are already investigating the matter and its Division of Enforcement is examining the credit derivative products traded by its London-based office.
Gensler told the Committee: "It appears that the bank here in the United States is absorbing these losses. And as a US bank, it is an entity with direct access to the Federal Reserve’s discount window and federal deposit insurance."
Although he could not provide details of the investigation Gensler pointed out that the regulator did not have the people on the ground to look at bank trades.
"Currently the American public is not protected in that way," Gensler said.
Chairman of the SEC Mary Schapiro also attended the committee and told them that the agency's role would be limited as the divisions involved were not covered by SEC regulations: "We did not have any direct oversight or knowledge or the transactions."
However, she added that the SEC would target "the appropriateness and completeness of the entity’s financial reporting and other public disclosures."
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