Sen. Sherrod Brown (D-Ohio) has asked the Office of the Comptroller of the Currency for details about its supervision of trading operations at J.P. Morgan Chase, and its process for reviewing trading operations at other big banks. Some lawmakers suspect a new risk model used by J.P. Morgan’s chief investment office failed to reflect the position traders had taken on a derivative index. When losses surpassed the projections of the new model, J.P. Morgan reverted to an older model that better reflected the positions’ risks. Brown wants to know if the OCC was told that the bank had moved to a new risk model, and whether the agency has launched an investigation into the decision to switch models. The Senate Banking Committee is scheduled to hold a hearing Wednesday that will focus on the trading loss.
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