The New York Federal Reserve Bank sharply criticized an internal probe carried out by the Fed’s inspector general on the handling of J.P. Morgan’s “London Whale” case, according to a full version of the probe released on Thursday.
The New York Fed said the inspector general was wrong to criticise examiners for failing to prioritise exams of J.P. Morgan’s chief investment office, according to the report.
The full report reveals an unusual and barbed clash between the Fed’s New York branch and its internal auditor. The New York Fed – the central bank’s eyes and ears on Wall Street – faced criticism on several fronts last year. The most damaging was the disclosure of secretly recorded tapes that portrayed New York Fed examiners as hesitant to demand answers and changes from Goldman Sachs officials.
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