A whistleblower has come forward with serious allegations against JPMorgan Chase, claiming that the largest bank in the United States violated crucial cash reserve rules designed to protect the financial system. The allegations, which suggest that JPMorgan Chase deliberately understated its risk to minimize its required capital reserves, have reignited concerns about regulatory oversight and financial stability. Senator Elizabeth Warren has voiced concerns that the Federal Reserve may be complicit in turning a blind eye to this misconduct.

According to the whistleblower, a former JPMorgan Chase banker, the bank engaged in a prohibited practice known as “netting.” This process allowed JPMorgan to underreport several indicators used by the Federal Reserve to assess its systemic complexity. By misrepresenting its financial risk, the bank was able to hold less capital in reserve than required, effectively reducing the financial buffer designed to protect against future crises.

The impact of this alleged manipulation is staggering. The whistleblower estimates that by understating its complexity, JPMorgan Chase was able to issue an additional $75 billion to $100 billion in loans, potentially generating $2 billion in extra net income in a single year. Such practices not only increase the bank’s profitability but also expose the financial system to greater risks.

Despite violating international banking standards under the Basel Accord, JPMorgan Chase-and other large US banks-were reportedly permitted to continue these practices with the tacit approval of the Federal Reserve. While the Basel framework is not legally binding, the Federal Reserve and other US institutions had pledged to fully implement these regulations.

Senator Elizabeth Warren has strongly criticized the Federal Reserve’s handling of........

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