New York Fed Was Told To Look Into London Whale Office In 2009, Decided To Take Long Lunch Instead

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The Federal Reserve Bank of New York failed to examine J.P. Morgan Chase & Co.’s investment unit ahead of the bank’s 2012 “London Whale” trading debacle, despite a recommendation from other Fed supervisors that they look at the unit involved in the trades, according to a new report. The Fed’s Office of Inspector General released a report Tuesday saying Fed supervisors didn’t follow up on signs that the bank’s chief investment office—where the traders engaging in the problematic derivatives transactions were based—needed a closer look. A team of experts from across the Fed system recommended that the New York Fed conduct “a full-scope examination” of the unit in 2009, but the New York Fed never did so, the report said. [WSJ]

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