Chris Blackhurst: So what's $6bn between friends? Such a big loss and so little fuss

Midweek View: Has a government or business been ragingover the London Whale's exploits? No. Has a client made a civil claim? No

Normally, after the exposure of a great banking scandal, the turn of events is predictable. Regulators launch an urgent inquiry, politicians huff and puff, corporate and supervisory heads roll, charges are brought, arrests made, civil lawsuits launched.

This is why the case of $6.2bn (£4bn) worth of losses run up by JP Morgan in the "London Whale" trading disaster is so strange.

Everything about the affair is odd. From the very off, when Bruno Iksil, the investment bank's trader in London (he was nicknamed the "London Whale" after his location and the scale of the market bets he placed) panicked at what he'd done, nothing has felt right. The initial response of JP Morgan's extremely PR-savvy and image-conscious chief executive, Jamie Dimon, was to dismiss it as a "tempest in a teapot". Later, he apologised, but his first reaction is nevertheless telling: he did not appear to care that much.

Mr Iksil, at the bank's Chief Investment Office (CIO) in London, seems to have been able to operate with a degree of latitude that is extraordinary. Again, hardly anyone is bothered. Indeed, the authorities seem more concerned about attempts to cover up his exploits than the losses piling up and spiralling out of control. He is said to be co-operating with investigators, while charges are reportedly close to being brought in the US against Javier Martin-Artajo and Julien Grout, his former colleagues in London, for allegedly trying to conceal what had occurred. JP Morgan brought a civil suit against Mr Martin-Artajo in London last year but that was dropped.

When the US Senate took an interest, JP Morgan maintained that the CIO was intended to restrict the bank's exposure to risk rather than to make money. This reasoning was dismissed by the Senate committee.

At other banks, faced with huge trading losses, there have been wholesale clearouts. Not at JP Morgan. Some bonuses have been clawed back but that's about it; many of Mr Iksil's colleagues are still there.

Even the bank's shares have not suffered. While JP Morgan is a huge banking organisation, a deficit of $6bn should be enough to raise serious questions about management practice – questions that ought to affect the share price. Not a bit of it. The shares are up by a third from their pre-Whale level.

As for clients, they are similarly unaffected. This is curious, since as one newspaper reported at the weekend on the rapid expansion of the CIO after the financial crisis (with its assets growing from $75bn in 2007 to $375bn in 2012): "JP Morgan, America's biggest bank, was viewed as a safe haven after the financial crisis and saw a huge influx of deposits from businesses and foreign governments." Has there been a business or government jumping up and down about the Whale's exploits? No. Has a civil claim been brought by a client to recover its cash? No.

This may be because the CIO was a proprietary trading operation, playing with the bank's own money. But $375bn? And losses of $6bn, that the bank can swallow with ease? I know prop trading has grown enormously in recent years, but is JP Morgan so rich that $6bn does not hurt? That it does not cause the chief executive to go nuclear, rather than dismiss it so casually? The latter may be true, in which case it confirms the suspicion that banks increasingly function on a different plane, one divorced from ordinary people, where $6bn is a mere trifle.

It does not seem right. What if, though, the Whale's stake money was not the bank's at all, not a client's or clients', but someone else's – namely, the US taxpayer's?

In 2008, after the collapse of Bear Stearns, the US Federal Reserve was desperate to avoid other failures and bank runs. It was anxious to shore up liquidity and persuaded the US banks to take heavily discounted loans. Several, including JP Morgan, did not actually require saving but took the money from the federal "discount window" nonetheless. What if that cash ended up with the Whale?

If true, it would explain JP Morgan's relative insouciance. It would be the reason for the lack of the usual fallout, the absence of legal actions from clients and demands for management heads to roll.

That would not make it, however, any less of a scandal.

Suggested Topics
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Sport
David Moyes and Louis van Gaal
football
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
News
i100
PROMOTED VIDEO
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
Arts and Entertainment
Worldwide ticket sales for The Lion King musical surpassed $6.2bn ($3.8bn) this summer
tvMusical is biggest grossing show or film in history
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
food + drink
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
News
A cabin crew member photographed the devastation after one flight
news
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits