By John Cassidy | The New Yorker
“I approve.” With the discovery of those two words that Jamie Dimon, the chairman and C.E.O. of JPMorgan Chase, wrote in an email on January 23, 2012, the most prominent banker on Wall Street has been directly tied to the burgeoning “London Whale” trading scandal, which has returned to the headlines in sensational fashion. In a hearing in Washington Friday, the scandal took another twist, with a senior government official asserting that, in the months leading up to the bank losing billions of dollars, Dimon ordered his underlings not to give the bank’s regulators information they had requested.
The escalation in the scandal started with Thursday’s publication of a three-hundred page report by a Senate subcommittee, which said Dimon not only signed off on a strategy that understated the risks being taken by the bank’s traders, including Bruno Iksil, a derivatives trader known as the Whale, who worked out of the bank’s tower at Canary Wharf in east London. After Iksil’s losses were revealed, last April, the report said, Dimon misled investors and the public about their nature.
On Friday, the Times reported that a criminal probe of the Whale affair by the Justice Department and the F.B.I. has reached an advanced stage. While the Times report says Dimon isn’t himself suspected of any wrongdoing, there can be no doubt that his career is on the line. For years now, he has been Wall Street’s untouchable: the magazine-cover star who, when many of his rivals were crashing and burning during the financial crisis, guided his bank through it all, mostly unharmed. He’s been invited to the White House (several times); Warren Buffett said he would be an excellent Treasury Secretary; he’s even been (largely) forgiven for whining about people criticizing bankers and their humungous pay packages.
But he won’t necessarily get through this one. If the feds were to indict any senior JPMorgan executives on charges arising from the Whale’s trades, which generated more than six billion dollars in losses, Dimon’s position could rapidly become untenable.