The Federal Reserve is not interested in whale-watching. In the closing chapter of JPMorgan Chase & Co.'s "London Whale" debacle, the Fed announced that the bank will pay a $200 million fine for the risk-management deficiencies that cost the bank nearly $6 billion.
When the now infamous Bruno "London Whale" Iksil made headlines for losing derivatives bets in early 2012, the incident forced the entire banking industry back into the spotlight. Regulators have worked to prevent a repeat of the financial crisis of 2008, and one of the main orders of business has been to ensure that big banks don't make big bets that put them in a position for potential big losses. The losses at Chase underscored the reality that the high-risk, high-reward attitude of traders at big banks was alive and well.
The Fed's penalty only represents a fraction of what Chase will pay for its risky trading activities. With additional fines from the Office of the Comptroller of the Currency, Securities and Exchange Commission, and the United Kingdom's Financial Conduct Authority, the bank will fork over a total of $920 million.
It's been an embarrassing case for Chase CEO Jamie Dimon, who also happened to be serving on the Board of the Federal Reserve Bank of New York at the time of the losses. Dimon appears to be relieved to put the troubles behind him and the bank.
"We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them," Dimon said in a statement after announcing the fines. "Since these losses occurred, we have made numerous changes that have made us a stronger, smarter, better company."
What do you think of the fine? Is it severe enough to send a message to other banks that will make sure these mistakes don't happen again?