[rayiner]

Nice summary of the situation. This is the takeaway for me:

"If you think of JPMorgan's businesses as operating more or less independently, but occasionally making each other money by cross-selling, then this mess makes more sense. A London investment bank that considered and rejected a derivative-linked investment in Madoff would have no obligations to report its suspicions to U.S. regulators. A boring custody bank that ran Madoff's checking accounts but had no derivatives traders to get suspicious about him also probably wouldn't be in trouble for missing the Madoff red flags. Combine the two businesses and the same behavior gets you in trouble."

Also, quite refreshing to read an article by someone who apparently has some experience with Wall Street. On a related note: I've been really happy with Bloomberg's coverage recently, of Wall Street specifically and the business world generally. Especially now what WSJ has decided to go full-on partisan.

[minimax]

Also, quite refreshing to read an article by someone who apparently has some experience with Wall Street.

According to his bio he worked in investment banking at Goldman and was an M&A lawyer before that. When I first found his column I went through and read a bunch of them. They're all all pretty good. If you like that sort of financial journalism from the perspective of former practitioners, another good one is Matthew C Klein who I guess used to work at Bridgewater Associates. If you want to kill the rest of your afternoon:

http://www.bloomberg.com/view/bios/matthew-s-levine/

http://dealbreaker.com/author/mlevine/

http://www.bloomberg.com/view/bios/matthew-klein/

[rayiner]

Thanks for the link to Klein!

[twoodfin]

Agreed. All I could think reading this was how much I wish every Matt Taibbi "bankster" screed posted to hn or reddit had been replaced with a link like this.

[retube]

Oh Matt Taibbi is a hack of the worst kind. His bullshit and propaganda infuriate me.

[hiharryhere]

I worked for JPM for a little over 3 years and this quote is bang on. I was in the custodial bank and we rarely spoke with the IB guys. Until about 2 years ago they were completely different LOBs, with separate executive teams. Org-chart wise, the only guy tying the businesses together at the top was Dimon.

[dman]

Bloombergs coverage has always been pretty balanced and factual.

Disclaimer: I worked for them in a past life but continue using their website as my primary news source long after having left the company.

[mathattack]

The reality on banks like this is that they are very hard to manage. There are specialists in every corner, and somehow the head of the bank has to keep tabs on all of them. Almost always, the money makers outearn the risk managers and compliance folks, so it's a game of catch-up. (Any bank that flipped it would go out of business - like the one honest used car salesman would.)

[rhizome]

If I didn't know better I'd think you were saying these banks are too big.

[mathattack]

It depends on your point of view. Too big for what? Big can come in different manners. # of people to watch when 1 or 2 can cause trouble. Size of assets. # of distinct businesses. Size of risk position. Size of counterparty risk.

[rhizome]

So big that they're hard to manage.