From Joe Nocera, “Make Banking Boring,” NYT:
“We also know that Ina Drew, a JPMorgan veteran who headed the chief investment office — and who departed on Monday — made $14 million last year. Wall Street executives who make $14 million are not risk managers. They are risk takers — big ones. And genuine hedging activity does not cost financial institutions billions of dollars in losses: their sole purpose is to protect against big losses. What causes giant losses are giant, unhedged bets, something we also learned in the fall of 2008.
“Thus, the final thing we know: At JPMorgan, nothing changed. The incentives, the behavior, even the trades themselves are basically the same as they were in the run-up to the financial crisis.” Emphasis added.
It also looks as if that $2 billion loss JPMorgan has acknowledged might end up being more like $4 billion. And warnings were being sounded about the bets as far back as 2007.