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News / Brèves / JPMorgan Chase Situation Gets More Interesting 15 May 2012 As calls on Congress for Glass-Steagall restoration get louder, the possibility is emerging that the Act may be immediately needed (among other far more important objectives) to save the commercial bank of JPMorgan Chase. All reports now are that the bank was unquestionably using its huge inflow of commercial bank deposits to build up its immense derivatives position (nominal value at least $70 trillion), including becoming the "whale" within the global credit default swaps market. Having bet wrong and lost, JPM Chase now faces the task of getting out of its positions in a market which is basically illiquid, where what liquidity there was was largely being provided by - JPM Chase. It can be forced to exit in a long and painful process with many, many billions in losses. And the money it is losing, came from the flow of its depositors’ FDIC-insured, Federally protected commercial-bank accounts. Today we learn that the quickly "resigned" chief risk officer of the whole bank, Ina Drew, is being immediately replaced by JPM Chase executive Matt Zames. Zames just happens to be the head of the financial sector-wide Treasury Borrowing Advisory Committee, which meets at least quarterly by statute with the U.S. Treasury to consult (and act) on financial conditions. In effect, the risk-run-wild at JPM Chase is now put under protection of a close Geithner/Bernanke collaborator. In September 2008, Jamie Dimon dispatched Zames to Bear Stearns to put that bank under, which Zames did by immediately calling the Fed and insisting that Bear Stearns "would not last another day," leading to the Fed giving Bear Stearns to JPM Chase virtually for nothing with a $30 billion infusion from the Fed buying Bear’s bad assets. More ironically, Zames "came up" in speculative finance as an executive of LTCM, so he is expert in dealing (unsuccessfully) with exactly the situation JPM Chase has now speculated itself into.