One of the big problems for Mr. Levin was that when JPMorgan finally updated its risk limit model -- known in banking as "value at risk," or VaR -- the new system was deeply flawed. There was little testing of the data, and it was largely dependent on manual entry of data every night.
And yet the VaR model showed that JPMorgan's risk had been cut drastically.
"You have a new Var, which cuts the VaR in half, and then boom, suddenly there's no breach," Mr. Levin says.
Mr. Bacon says that such a phenomenon "requires a lot of inquiry and explanation." For her part, Ms. Drew says she was "disappointed" that the model, created by highly knowledgeable people with doctoral degrees, was so lacking.
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