JPMorgan's Risk Committee Members Had No Experience in Banking Or Financial Risk Management. Who Could Have Predicted Problems?

You really have to wonder why a huge company like JPMorgan would want people like this sitting on their risk committee:

The three directors who oversee risk at JPMorgan Chase & Co. (JPM) include a museum head who sat on American International Group Inc.’s governance committee in 2008, the grandson of a billionaire and the chief executive officer of a company that makes flight controls and work boots.

What the risk committee of the biggest U.S. lender lacks, and what the five next largest competitors have, are directors who worked at a bank or as financial risk managers. The only member with any Wall Street experience, James Crown, hasn’t been employed in the industry for more than 25 years.

“It seems hard to believe that this is good enough,” said Anat Admati, a professor of finance at Stanford University who studies corporate governance. “It’s a massive task to watch the risk of JPMorgan.”

Boy, that's the understatement of the year. Why, it's almost as if they wanted unqualified people!

The bank has been under siege since CEO Jamie Dimon said May 10 that the firm’s chief investment office suffered a $2 billion loss trading credit derivatives. He later called it “a Risk 101 mistake.” Shares of the New York-based company have fallen about 18 percent since, and at least half a dozen agencies, including the U.S. Department of Justice and the Securities and Exchange Commission, are investigating.

The probes began after traders in the London office, which manages the bank’s excess cash, made wrong-way bets on illiquid credit derivatives, some of them so large they distorted market prices. Dimon transformed the division under Ina Drew, who resigned over the losses, from a sleepy haven for traders of U.S. Treasuries into a profit center with an increasing appetite for exotic wagers.

Crown, 58, who is president of Chicago-based Henry Crown & Co. and lead director of defense contractor General Dynamics Corp. (GD), sits on the risk committee with Ellen Futter and David Cote. Futter, 62, is president of the American Museum of Natural History in New York, and Cote, 59, is CEO of Honeywell International Inc.

The committee, which met seven times last year and hasn’t changed its composition since 2008, approves the bank’s risk-appetite policy and oversees the chief risk officer, according to the company’s April 4 proxy statement

via Crooks and Liars http://crooksandliars.com/susie-madrak/jpmorgans-risk-committee-members-had-