JPMorgan Chase helped take Twitter public last week. But on Wednesday evening, the banking giant got a taste of the social network’s power — in a very negative way. 
 
 The firm called off a question-and-answer session with James B. Lee Jr., its vice chairman and top deal maker, after Twitter users complied with its request for queries with a stream of ribald questions and hostile jokes. 
 
 A spokesman for the firm wrote in an email, “#Badidea! Back to the drawing board!” 
 
 Through its roughly year-old Twitter account, @JPMorgan began teasing a Q. and A. with a senior executive last week: 
 
 What career advice would you ask a leading exec at a global firm? Tweet a Q using #AskJPM. On 11/14 a $JPM leader takes over @JPMorgan — J.P. Morgan (@jpmorgan) 7 Nov 13 
 
 On Monday, the firm revealed that the respondent would be Mr. Lee, who was part of the team that worked on Twitter’s successful initial public offering. 
 
 It’s a #TwitterTakeover: On 11/14 $JPM Vice Chairman, Jimmy Lee, takes over @JPMorgan to answer questions. Use #AskJPM to tweet a question. — J.P. Morgan (@jpmorgan) 11 Nov 13 
 
 The original idea — which had been kicked around the firm over the last few weeks, according to a person briefed on the matter — was to come up with an out-of-the-box way to use social media. The target audience was students, with Mr. Lee expected to focus on career advice. 
 
 $JPM VC Jimmy Lee will do his 1st Q&A on his experiences, leadership & #CareerAdvice at 1pm ET on 11/14. Tweet questions early using #AskJPM — J.P. Morgan (@jpmorgan) 11 Nov 13 
 
 Twitter’s prolific users had other things in mind. Over much of Wednesday afternoon, Twitter users asked an array of decidedly non-career-related questions of the bank, many unsuitable for a family audience. 
 
 Some subtly poked fun of the firm and its troubles, including the multibillion-dollar trading loss racked up by a trader nicknamed the London Whale: 
 
 Others attacked the firm’s ties to Washington and the White House: 
 
 What illegal deals did Jamie Dimon and the other big banks make with Obama at the closed-door meeting on Oct 2, 2013? #AskJPM — ლ(ಠ益ಠლ) Mike (@ComparePMPrices) 13 Nov 13 
 
 Some took a more populist tack: 
 
 After reading the #AskJPM tweets, is it true that your traders have gone short banksters and long guillotines? — Jack Lord (@jacklord) 13 Nov 13 
 
 #askjpm do you feel bad about systematically undermining democracy? Do you know what fiduciary duty is? — lisaansell3 (@lisaansell3) 14 Nov 13 
 
 Others who have asked for user-submitted questions have often found themselves the butt of jokes, something JPMorgan is learning the hard way. Still, no one will lose their jobs over the fracas, the person briefed on the matter said. 
 
 All the same, while JPMorgan may have called off the Q. and A., users haven’t abandoned the #askjpm hashtag, with “questions” still flooding Twitter. ||||| The settlement discussions stem from work by a mortgage-backed securities task force. | AP Photos DOJ, JPMorgan strike tentative deal 
 
 JPMorgan Chase has reached a tentative agreement with the Justice Department to pay a record $13 billion to settle civil investigations into faulty mortgage securities the bank sold to investors in the lead up to the financial crisis, according to two people familiar with the negotiations. 
 
 The tentative deal was reached Friday night in a call involving Attorney General Eric Holder and JPMorgan Chase CEO Jamie Dimon, one of the sources said. 
 
 Story Continued Below 
 
 It would be the largest settlement ever between Justice and a single company. 
 
 ( QUIZ: How well do you know Eric Holder?) 
 
 The package is expected to include $9 billion in penalties paid to the government and $4 billion in relief for consumers. 
 
 The deal would mark a victory for the Obama administration, which has been criticized for not being more aggressive in pressing cases against Wall Street firms following the 2008 financial crisis. 
 
 For JPMorgan, the deal would be its latest, and most significant, attempt to settle a series of legal challenges from the government — investigations that are eating into the bank’s profits as well as its reputation as Wall Street’s best run bank. 
 
 The deal is not done and the final settlement is being negotiated through the mortgage securities task force President Barack Obama created in 2012, according to one source. This group is co-chaired by officials from Justice, the Securities and Exchange Commission and the office of New York Attorney General Eric Schneiderman. 
 
 ( Sign up for POLITICO’s Morning Money tip sheet) 
 
 Still being negotiated are the details of what JPMorgan will admit to in terms of wrongdoing. 
 
 JPMorgan was seeking protection from criminal prosecution as part of the deal, but in a call about a week ago Holder told Dimon that was a nonstarter, according to a source. 
 
 On Friday, Dimon and JPMorgan General Counsel Stephen Cutler agreed to proceed with the civil side settlement even without assurances of no federal criminal prosecutions. 
 
 Spokesmen for JPMorgan and the Justice Department declined to comment. 
 
 Over the past year JPMorgan has faced a series of investigations that dented the reputation of both the bank and Dimon, who won plaudits following the financial crisis for his risk management skills. 
 
 ( Also on POLITICO: DOJ loss on 'Fast and Furious') 
 
 In recent weeks, the bank has struck deals with various regulators intended to put an end to the firm’s legal woes. 
 
 Last month the bank agreed to a $920 million settlement with regulators over the London Whale trading debacle, along with separate deals over credit card and debt collection problems. 
 
 JPMorgan’s legal troubles caused it to this month report its first quarterly loss since Dimon became CEO in 2005. The bank reported that it lost $380 million in the third quarter after spending about $9.3 billion on legal expenses. It is now reserving roughly $23 billion for litigation costs. 
 
 Dimon has said that many of the issues with past mortgage bonds subject to the settlement with Justice and other agencies center around failing institutions — Bear Stearns and Washington Mutual — the bank took over in 2008 with encouragement from the government. 
 
 The government’s decision to press cases involving Bear and WaMu have clearly been a sore point for Dimon, but at this point JPMorgan appears to have decided its best to be done with the issue. 
 
 “It is very hard to fight with your regulators or the federal government, but we want them to be fair and reasonable,” Dimon told analysts on Oct. 11 when the company released its third quarter earnings. 
 
 As part of the tentative $13 billion deal, JPMorgan will pay $4 billion as part of an agreement with FHFA over mortgage-backed bonds the bank sold to taxpayer owned Fannie Mae and Freddie Mac in the lead up to the financial crisis, according to a source. 
 
 The FHFA sued JPMorgan and 17 other banks in 2011 alleging that the underlying loans in more than $200 billion worth of mortgage bonds sold to Fannie and Freddie were riskier than disclosed. The agency’s suit against JPMorgan covered roughly $33 billion in bonds sold between 2005 and 2007. 
 
 JPMorgan would become the fourth bank to settle the claims. UBS agreed in July to pay $885 million in its settlement. GE Capital and Citigroup reached settlements earlier in the year, but those amounts were not disclosed. 
 
 The deal with JPMorgan and the ongoing investigation into possible criminal charges would burnish the reputation of the president’s task force, which has been criticized for acting too slowly. 
 
 The SEC, under the umbrella of the working group, reached separate settlements with Credit Suisse and JPMorgan in November 2012. 
 
 There are still open cases against Credit Suisse and other firms, including a suit filed against Standard & Poor’s alleging the credit rating agency committed fraud when it stamped toxic mortgage bonds triple-A. A separate suit was filed against Bank of America and its affiliates, including Merrill Lynch, in August for allegedly defrauding investors in $850 million of mortgage-backed securities sold in 2008. ||||| JPMorgan Chase & Co. (JPM) and Barclays Plc (BARC) are among seven banks subpoenaed in New York and Connecticut’s investigation into alleged manipulation of Libor, according to a person familiar with the matter and company filings. 
 
 Subpoenas were sent in recent weeks to five of the banks, Deutsche Bank AG (DBK), Royal Bank of Scotland Group Plc and HSBC Holdings Plc (HSBA) in addition to JPMorgan and Barclays, the person said yesterday. Citigroup Inc. (C) and UBS AG (UBSN) received subpoenas earlier this year as part of the investigation. 
 
 New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen are jointly investigating alleged manipulation of the London interbank offered rate by lenders. RBS, UBS, Lloyds Banking Group Plc (LLOY) and Deutsche Bank are among the lenders regulators in Europe, Asia and the U.S. are investigating. The U.S. is conducting a criminal investigation. 
 
 Confidence in Libor, a benchmark for financial products valued at $360 trillion worldwide, has been dented by Barclays’s admission that it submitted false London and euro interbank offered rates. Robert Diamond resigned as Barclays’ chief executive after the bank was fined 290 million pounds ($454 million). 
 
 Photographer: Scott Eells/Bloomberg Pedestrians pass in front of the JP Morgan Chase & Co. headquarters in New York. Close Pedestrians pass in front of the JP Morgan Chase & Co. headquarters in New York. Close Open Photographer: Scott Eells/Bloomberg Pedestrians pass in front of the JP Morgan Chase & Co. headquarters in New York. 
 
 False Submissions 
 
 Derivatives traders requested the false submissions in the Libor and Euribor setting process, as they were “motivated by profit and sought to benefit Barclays’ trading positions,” the U.K. Financial Services Authority said. 
 
 The investigation by Schneiderman and Jepsen could broaden to include additional banks, said the person. 
 
 Jennifer Givner, a spokeswoman for Schneiderman, and Jaclyn Falkowski, a spokeswoman for Jepsen, declined to comment on the subpoenas. 
 
 Sarah Binnie, a spokeswoman for Edinburgh-based RBS, said the bank continues to receive requests from various regulators investigating the setting of Libor and other interest rates. The lender is cooperating with the investigations and “keeping relevant regulators informed,” she said in e-mail. 
 
 “It is not possible to estimate with any certainty what effect these investigations and any related developments may have on the group,” Binnie said. 
 
 Information Requests 
 
 Kathryn Hanes, a spokeswoman for Deutsche Bank, said the lender has received subpoenas and requests for information from some regulators and governmental entities in the U.S. in connection with setting interbank rates and is cooperating. 
 
 New York-based Citigroup said in a regulatory filing that subsidiaries “have received additional requests for information and documents from various U.S. and non-U.S. governmental agencies, including the offices of the New York and Connecticut attorneys general.” 
 
 Photographer: Daniel Acker/Bloomberg Traffic passes the offices of Barclays Capital in New York. Close Traffic passes the offices of Barclays Capital in New York. Close Open Photographer: Daniel Acker/Bloomberg Traffic passes the offices of Barclays Capital in New York. 
 
 UBS said in a regulatory filing that numerous agencies, including “various state attorneys general” are investigating whether there were improper attempts to manipulate Libor and other rates. A second person familiar with the matter said the bank received a subpoena from New York in February. Both declined to comment because the matter is private. 
 
 New York-based JPMorgan dropped almost 1 percent on the news. JPMorgan closed at $37.07 in New York Stock Exchange composite trading. London-based Barclays’s American depositary receipts fell 6 cents to $11.47. One receipt equals four shares. Zurich-based UBS fell 3 cents to $10.71 in New York. Frankfurt- based Deutsche Bank rose 9 cents to $30.78. 
 
 ‘Actively Reviewing’ 
 
 Joe Evangelisti, a JPMorgan spokesman, Juanita Gutierrez, a spokeswoman at HSBC, and Barclays spokesman Michael O’Looney declined to comment on the subpoenas. HSBC said in a 2012 interim report that it is “the subject of regulatory demands” and is cooperating with the investigations. 
 
 Photographer: Peter Foley/Bloomberg Workmen raise the JP Morgan Chase Inc. flag outside company headquarters in New York. Close Workmen raise the JP Morgan Chase Inc. flag outside company headquarters in New York. Close Open Photographer: Peter Foley/Bloomberg Workmen raise the JP Morgan Chase Inc. flag outside company headquarters in New York. 
 
 In addition to Schneiderman and Jepsen, Florida Attorney General Pam Bondi is “actively reviewing the Libor matter” and has issued subpoenas, spokeswoman Jenn Meale said yesterday in e-mails. Massachusetts Attorney General Martha Coakley’s office said in July it was also conducting a Libor investigation and was working with other state agencies. 
 
 Libor is derived from a survey of banks conducted each day on behalf of the British Bankers’ Association in London. Lenders are asked how much it would cost them to borrow from one another for 15 different periods, from overnight to one year, in currencies including dollars, euros, yen and Swiss francs. After a set number of quotes are excluded, those remaining are averaged and published for each currency by the BBA before noon. 
 
 To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net 
 
 To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net ||||| Carl Leven Bill Pugliano/Getty Image 
 
 Beginning at 9:30 a.m. tomorrow, I'm going to be live-blogging a hearing held by Senator Carl Levin's Permanent Subcommittee on Investigations – the best crew of high-end detectives this side of The Wire, in my opinion – who will be grilling J.P. Morgan Chase executives and high-ranking federal regulators in a get-together entitled, "J.P. Morgan Chase "Whale" Trades: A Case History Of Derivatives Risks And Abuses." This follows this afternoon's release of a brutal 301-page report commissioned by Levin and Republican John McCain by the same name. 
 
 The Subcommittee investigators, largely the same crew who unraveled financial scandals surrounding infamous Goldman Sachs trades like Abacus and Timberwolf, and also took on HSBC's trans-global money-laundering activities in an extraordinarily detailed report issued last summer, have now taken aim at the heart of the Too-Big-To-Fail issue through its examination of the much-publicized catastrophic derivative trades made by its amusingly-nicknamed "London Whale" trader, Bruno Iksil, last year. 
 
 Most ordinary people dimly remember the London Whale episode now, and even at the time struggled to understand even the vaguest contours of the story while mainstream reporters (including people like myself) were trying with all their might to make sense of it from afar. What most people got out of that story was that J.P. Morgan Chase somehow lost buttloads of money through some sort of impossibly complex derivative trade – billions, though nobody could ever settle on an exact number – and that this was somehow a very bad thing that required the attention of the federal government, although even that part of it was a bit of a mystery to most ordinary people. 
 
 Gangster Bankers: Too Big to Jail 
 
 Why should we care if a private bank, or more to the point a private banker like Chase CEO Jamie Dimon, loses a few billion here and there? What business is it of ours? And why did we have to have congressional hearings about it last year? The whole thing certainly seemed a big mystery to Dimon himself, who dragged himself to Washington and spent the entire time rolling his eyes and snorting at Senators' questions, clearly put out that he even had to be there. 
 
 This new report by the Permanent Subcommittee answers the question of why the public needed to be involved in that episode. What the report describes is an epic breakdown in the supervision of so-called "Too Big to Fail" banks. The report confirms everyone's worst fears about what goes on behind closed doors at such companies, in the various financial sausage-factories that comprise their profit-making operations. 
 
 If the information in the report is correct, Chase followed the behavioral model of every corrupt/failing hedge fund this side of Bernie Madoff and Sam Israel, only it did it on a much more enormous scale and did it with federally-insured deposits. The fund used (in part) federally-insured money to create, in essence, a kind of super high-risk hedge fund that gambled on credit derivatives, and just like Sam Israel did with his Bayou fund, when it got in trouble, it resorted to fudging its numbers in order to disguise the fact that it was losing money hand over fist. 
 
 Chase for years hid the very existence of this operation from banking regulators and lied about the purpose of the fund (saying it was purely a hedging operation when it stopped being a hedge and instead became a wild directional gamble), and it also changed the way it calculated the fund's value once it started to lose hundreds of millions of dollars. Even worse, the bank's own internal auditors signed off on the phoney-baloney accounting of this Synthetic Credit Portfolio (SCP), at one point allowing it to claim $719 million in losses when the real number was closer to $1.2 billion. 
 
 How did they do this? In the years leading up to January of 2012, Chase used a standard, plain-vanilla method to price the derivative instruments in its portfolio. The method was known as "mid-market pricing": if on any given day you had a range of offers for a certain instrument – the "bid-ask" range – "mid-market pricing" just meant splitting the difference and calling the value the numerical middle in that range. 
 
 But in the beginning of 2012, Chase started to lose lots of money on the derivatives in its SCP, and just decided to change its valuations, that they weren't in the business of doing "mids" anymore. One executive thought the "market was irrational." As the Subcommittee concluded: 
 
 By the end of January, the CIO had stopped valuing two sets of credit index instruments on the SCP's books, the CDX IG9 7-year and the CDX IG9 10-year, near the midpoint price and had substituted instead noticeably more favorable prices. 
 
 If you can fight through the jargon, what this basically means is that Chase decided to go into the fiction business and invent a new way to value its crazy-ass derivative bets, using, among other things, a computerized model the company designed itself called "P&L; predict" which subjectively calculated the value of the entire fund toward the end of every business day. 
 
 If this all sounds familiar, it's because it's the same story we've heard over and over again in the financial-scandal era, from Enron to WorldCom to Lehman Brothers – when the going gets tough, and huge companies start to lose money, they change their own accounting methodologies to hide their screw-ups, passing the buck over and over again until the mess explodes into the public's lap. The difference is that Chase is a much bigger and more dangerous company to be engaging in this kind of behavior. 
 
 An even scarier section of the report regards the reaction of the Office of the Comptroller of the Currency, or OCC, the primary government regulator of Chase. The report exposes two huge problems here. One, Chase consistently hid crucial information from the OCC, including the sort of massive increases in risk the OCC was created precisely to monitor. Two, even when the bank didn't hide stuff, the OCC was either too slow or too disinterested to take notice of potential problems. From the report: 
 
 During 2011, for example, the notional size of the SCP grew tenfold from about $4 billion to $51 billion, but the bank never informed the OCC of the increase. At the same time, the bank did file risk reports with the OCC disclosing that the CIO repeatedly breached the its stress limits in the first half of 2011, triggering them eight times, on occasion for weeks at a stretch, but the OCC failed to follow up with the bank. 
 
 In other words, Chase added nearly $50 billion in risk and failed to mention the fact to the OCC – but the OCC also failed to bat an eyelid when Chase breached its stress limits eight times in a space of six months, often for weeks at a time. Do you feel safer now? 
 
 This episode proves what everyone already implicitly understands about these gigantic banking institutions: that their accounting is often little more than a monstrous black box within which any sort of mischief can and probably is being hidden from shareholders, counterparties, and the public, which has a direct interest in the health of these banks because (a) their enormous size makes them systemically important, i.e. we'd all be screwed if any of them collapsed, and (b) they are the supposedly cautious and conservative guardians of billions in federally-insured deposits. 
 
 The Senate investigators highlighted a frightening metaphor to explain what they found out about Chase's response to its burgeoning accounting disaster last winter and spring: 
 
 The head of the CIO's London office, Achilles Macris, once compared managing the Synthetic Credit Portfolio, with its massive, complex, moving parts, to flying an airplane. The OCC Examiner-in-Charge at JPMorgan Chase told the Subcommittee that if the Synthetic Credit Portfolio were an airplane, then the risk metrics were the flight instruments. In the first quarter of 2012, those flight instruments began flashing red and sounding alarms, but rather than change course, JPMorgan Chase personnel disregarded, discounted, or questioned the accuracy of the instruments instead. 
 
 Investigators took note of this and then, sensibly, wondered if Chase was the only bank ignoring all those flashy lights: 
 
 The bank's actions not only exposed the many risk management deficiencies at JPMorgan Chase, but also raise systemic concerns about how many other financial institutions may be disregarding risk indicators and manipulating models to artificially lower risk results and capital requirements. 
 
 Anyway, officials from Chase and the OCC are being dragged in tomorrow to answer some heavy questions about all of this. Expect a lot of double-talk, sweaty foreheads, pompous "You just don't understand because you don't make enough money" excuses, and other sordid behaviors. Tune in here for updates. 
 
 In the meantime, kudos to Senator Levin and to his Republican partner in this investigation, John McCain, for taking on this topic. Increasingly, key voices in the upper chamber like these two, plus Ohio's Sherrod Brown, Iowa's Chuck Grassley, Oregon's Jeff Merkley, Vermont's Bernie Sanders and others are starting to act genuinely worried about the Too Big to Fail issue. Their determination to keep it in the public eye is, to me, a signal that a consensus is forming behind the scenes on the Hill. ||||| Photo 
 
 In a series of late-night emails, JPMorgan Chase executives in Hong Kong lamented the loss of a lucrative assignment. 
 
 “We lost a deal to DB today because they got chairman’s daughter work for them this summer,” one JPMorgan investment banking executive remarked to colleagues, using the initials for Deutsche Bank. 
 
 The loss of that business in 2009, coming after rival banks landed a string of other deals, stung the JPMorgan executives. For Wall Street banks enduring slowdowns in the wake of the financial crisis, China was the last great gold rush. As its economy boomed, China’s state-owned enterprises were using banks to raise billions of dollars in stock and debt offerings — yet JPMorgan was falling further behind in capturing that business. 
 
 The solution, the executives decided over email, was to embrace the strategy that seemed to work so well for rivals: hire the children of China’s ruling elite. 
 
 “I am supportive to have our own” hiring strategy, a JPMorgan executive wrote in the 2009 email exchange. 
 
 In the months and years that followed, emails and other confidential documents show, JPMorgan escalated what it called its “Sons and Daughters” hiring program, adding scores of well-connected employees and tracking how those hires translated into business deals with the Chinese government. The previously unreported emails and documents — copies of which were reviewed by The New York Times — offer a view into JPMorgan’s motivations for ramping up the hiring program, suggesting that competitive pressures drove many of the bank’s decisions that are now under federal investigation. 
 
 The references to other banks in the emails also paint for the first time a broad picture of questionable hiring practices by other Wall Street banks doing business in China — some of them hiring the same employees with family connections. Since opening a bribery investigation into JPMorgan this spring, the authorities have expanded the inquiry to include hiring at other big banks. Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley have previously been identified as coming under scrutiny. A sixth bank, UBS, is also facing scrutiny, according to interviews with current and former Wall Street employees. Neither JPMorgan nor any of the other banks have been accused of wrongdoing. 
 
 Still, the investigations have put Wall Street on high alert, said the current and former employees, who were not authorized to speak publicly. Some banks, they said, have adopted an unofficial hiring freeze for well-connected job candidates in China. 
 
 The investigation has also had a chilling effect on JPMorgan’s deal-making in China, interviews show. The bank, seeking to build good will with federal authorities, has considered forgoing certain deals in China and abandoned one assignment altogether. 
 
 The pullback comes just as JPMorgan had regained a significant share of the Chinese market. Its deal-making revived a few years after it escalated the Sons and Daughters program in 2009, an analysis of data from Thomson Reuters shows. In 2009, JPMorgan was 13th among banks winning business in China and Hong Kong. By 2013, once other banks had scaled back their Chinese business, it had climbed to No. 3. Other data shows that the bank was eighth in 2009 and — after losing market share in 2011 and 2012 — is now No. 4 in deal-making. While the hiring boom coincided with the increased business, the data does not establish a causal link between the two. 
 
 Yet the Securities and Exchange Commission and federal prosecutors in Brooklyn, which are leading the JPMorgan inquiry, are examining whether the bank improperly won some of those deals by trading job offers for business with state-owned Chinese companies. The S.E.C. and the prosecutors, which might ultimately conclude that none of the hiring crossed a legal line, did not comment. 
 
 JPMorgan, which is cooperating with the investigation, also declined to comment. There is no indication that executives at the bank’s headquarters in New York were aware of the hiring practices. The six other banks facing scrutiny from the S.E.C. declined to comment on the investigations, which are at an early stage. 
 
 Economic forces fueled the hiring boom by Wall Street banks. 
 
 An era of financial deregulation in Washington coincided with a roaring economy in China, enabling questionable hiring practices to escape government scrutiny. The hiring became so widespread over the last two decades that banks competed over the most politically connected recent college graduates, known in China as princelings. 
 
 Goldman’s employee roster briefly included the grandson of the former Chinese president Jiang Zemin. And Feng Shaodong, the son-in-law of a high-ranking Communist Party official, worked with Merrill Lynch. 
 
 In recent months, though, federal authorities have adopted a tougher stance toward Wall Street firms suspected of trading jobs for government business. The S.E.C. and the Brooklyn prosecutors have bolstered enforcement of the Foreign Corrupt Practices Act, which effectively bans United States corporations from giving “anything of value” to foreign officials to gain “any improper advantage” in retaining business. JPMorgan would have violated the 1977 law if it had acted with “corrupt” intent. 
 
 While the JPMorgan emails provided to federal authorities and reviewed by The Times most frequently referred to Deutsche Bank and Goldman, other banks might have also inspired JPMorgan’s hiring. 
 
 Both JPMorgan and Credit Suisse, for example, did business with Fullmark, a consulting firm run by the only daughter of Wen Jiabao, then the prime minister of China. Another prized JPMorgan hire, whose father is the chairman of a state-owned financial conglomerate, previously held internships at Citigroup and Goldman. 
 
 JPMorgan executives in Hong Kong also studied the hiring movements of banks with a firmer foothold in China, the documents and emails show. “Learned from GS,” one JPMorgan executive wrote in an email to colleagues, referring to Goldman Sachs’s hiring practices. 
 
 JPMorgan’s legal woes extend beyond China. In November, JPMorgan struck a $13 billion settlement with government authorities over the bank’s sale of questionable mortgage-backed securities. 
 
 But unlike the mortgage pact, which focused on the bank’s financial crisis-era business, the China investigations take aim at hiring practices that lasted until this year. And while the $13 billion payout involved civil settlements with various authorities, the bribery inquiry carries the threat of criminal penalties. A few top JPMorgan executives in Hong Kong have hired criminal defense lawyers, interviews show. 
 
 The fallout from the investigation may also hamper the bank’s relationships with clients. As the investigation intensified in recent months, JPMorgan withdrew from a deal in which it was advising Cofco, a large state-run food company. JPMorgan offered the daughter of the company’s chairman a short-term internship in 2011, according to securities filings, and another internship in 2012. 
 
 “We really need her to be back,” a JPMorgan executive in Hong Kong wrote in an email. “Her father called and emailed me.” 
 
 The bank created the Sons and Daughters program in 2006 to ensure that the hiring would pass legal and regulatory muster. 
 
 But then JPMorgan’s investment banking business began to lose market share in China, the data from Thomson Reuters shows. By the time JPMorgan lost the 2009 deal to Deutsche Bank, the Hong Kong executives at JPMorgan’s investment bank decided that it needed to step up its hiring. 
 
 “A missed opportunity for us this year,” an executive said in an email upon learning of the loss to Deutsche Bank. “Can you guys craft a program that could work for us?” 
 
 The investment banking unit experimented with a program that would have offered well-connected hires a one-year contract worth $70,000 to $100,000. The program, internal documents said, might offer “directly attributable linkage to business opportunity.” 
 
 Still, some Hong Kong executives pushed for more of what they called “client referral” hiring to keep pace with rivals. 
 
 “We do way, way, way too little of this type of hiring and I have been pounding on it with China team for a year,” a JPMorgan employee wrote to a colleague in a 2010 email. In that same email, the employee added: “confidential, just added son of #2 at SinoTruk to my team,” referring to a company that is part of a state-owned trucking enterprise. 
 
 He added: “I got room for a lot more hires like this (Goldman has 25).” 
 
 JPMorgan’s expanded program had an apparent coup when Tang Xiaoning, whose father is the chairman of the financial conglomerate China Everbright Group, was hired. Until that 2010 hiring, which has been previously reported by The Times, the bank had missed out on deal after deal from China Everbright, including one assignment that went to Morgan Stanley. 
 
 But since the younger Mr. Tang was hired, China Everbright and its subsidiaries hired JPMorgan at least three times, according to Standard & Poor’s Capital IQ, a research service. 
 
 When pursuing an assignment from Taikang, a life insurer that was not owned by the state, JPMorgan executives drew a similar link between hiring and deal-making. Hoping to get the nod to advise Taikang on an initial public offering of stock, emails show, JPMorgan sought to hire the chairman’s niece. But it had stiff competition. 
 
 “Regarding to the juicy size, every existing active banks are trying to lobby with them,” a JPMorgan banker wrote in an email, which is unlikely to become a focus of the federal investigation, because it involves a private company. Goldman, which employed the chairman’s son, had a direct investment in the company. And the Royal Bank of Scotland was “trying to approach” the chairman’s niece, the banker wrote, “to compete us.” 
 
 David Barboza contributed reporting. ||||| If you're going to do naughty stuff I guess there are about two ways to proceed, which are: 
 
 Do the naughty stuff as soon as you think of it, before anyone's had time to figure out that it's naughty and ban it, or 
 
 
 
 Wait until a lot of other people are doing the naughty stuff, so you can go around being all "that? That was naughty? Naaah, come on, everyone was doing it." 
 
 
 
 The advantages of approach No. 1 are obvious, principally from a business perspective: The naughty thing presumably makes you money, and this way you get to do more of it faster. 
 
 You might think that approach No. 2 offers the compensating advantage of being a bit safer, but nope! The Times's latest installment in its JPMorgan Chase China hiring story is here and it is so embarrassing and sad. Basically JPMorgan had a program, unfortunately named "Sons and Daughters," that was designed to prevent it from illegally hiring sons and daughters of Chinese officials in order to win business. Then it noticed that all the other banks were illegally hiring sons and daughters of Chinese officials in order to win business. 
 
 So after losing a deal to Deutsche Bank because the client's chairman's daughter worked for Deutsche, JPMorgan reconsidered: 
 
 JPMorgan’s investment banking business began to lose market share in China, the data from Thomson Reuters shows. By the time JPMorgan lost the 2009 deal to Deutsche Bank, the Hong Kong executives at JPMorgan’s investment bank decided that it needed to step up its hiring. 
 
 
 
 “A missed opportunity for us this year,” an executive said in an email upon learning of the loss to Deutsche Bank. “Can you guys craft a program that could work for us?” 
 
 The answer was "soooooort of," in that those guys crafted a program that worked for JPMorgan -- hiring sons and daughters, winning deals -- until the Times and the Securities and Exchange Commission got involved. And so you'd get e-mails like this: 
 
 “We do way, way, way too little of this type of hiring and I have been pounding on it with China team for a year,” a JPMorgan employee wrote to a colleague in a 2010 email. In that same email, the employee added: “confidential, just added son of #2 at SinoTruk to my team,” referring to a company that is part of a state-owned trucking enterprise. 
 
 
 
 He added: “I got room for a lot more hires like this (Goldman has 25).” 
 
 The Times reports that "authorities have expanded the inquiry to include hiring at other big banks," including Goldman, but still you can see why this looks worse for JPMorgan, with its one trucking scion, than for Goldman, with its 25. Because you're allowed to hire trucking scions, or whatever. You're just not allowed to do it to corruptly win business. Who knows what that means, but e-mailing about how it will win you business probably looks more corrupt than not e-mailing about it. "Oh no," Goldman can say, "these 25 kids were just the most qualified bankers in China; the fact that their parents all run state-owned companies is a pure coincidence." JPMorgan can't say that. 
 
 It's a little reminiscent of the Justice Department's weird lawsuit against Standard & Poor's for misrating mortgage-backed securities. The thing about S&P is that it was rating MBS too strictly, and was losing business to Moody's. So it quite sensibly decided to rate MBS less strictly to win back some business, and it somewhat less sensibly kept a written record of that decision and the attendant debates. And so the DoJ sued S&P. Moody's, meanwhile, had the bright idea to just have less strict ratings to begin with, so it never had to send around internal memos to the effect of "let's lower our standards to compete with S&P." And so the DoJ left Moody's alone. 
 
 If you have a deeply rules-based compliance culture this is sort of what you get: A lot of good, or good-ish, qualities get penalized. JPMorgan was less aggressive about corrupt hiring than some of its competitors, tried harder than them to construct a compliant system, and kept careful and auditable records. And now is in more trouble than its less scrupulous competitors. 
 
 The thing that is rewarded is ... well, one of two things. You could be rewarded for pure good. If you have a deeply principled culture of compliance, and are genuinely devoted to staying well away from any gray areas, your e-mails will always be unimpeachable and this sort of thing will never come up. 
 
 Or you could be rewarded for pure evil. If your China bankers aren't even aware that hiring sons and daughters to win business might be bad, then they won't create elaborate spreadsheets tracking their misdeeds, or e-mail each other about how much they need to hire princelings to win business. They'll just do it. The most effective compliance program of all might just be "do whatever you want but never say anything in writing." A policy that could have served JPMorgan well in China. 
 
 Why else are you doing it? Don't answer that.
– We're going to go ahead and guess that JPMorgan's social media staff is getting an earful today. Fresh from helping Twitter launch its IPO, the company announced that Vice Chairman Jimmy Lee would be holding a Twitter Q&A today, urging people to tweet questions with the #AskJPM hashtag. Questions started pouring in yesterday—but they probably weren't the kind JPMorgan was hoping for. Examples include: "At what number of Billions of Dollars in fines will it no longer be profitable to run your criminal enterprise? #askjpm" (link) "Do you have a secret jail in your offices so your executives get at least one chance to see the inside of one? #AskJPM" (link) "I have Mortgage Fraud, Market Manipulation, Credit Card Abuse, Libor Rigging and Predatory Lending AM I DIVERSIFIED? #AskJPM" (link) "Would you rather negotiate with 1 horse-sized Eric Holder, or 100 duck-sized Eric Holders? #AskJPM" (link) "As a young sociopath, how can I succeed in finance? #AskJPM" (link) "Are you involved in a massive corruption scandal in China? #AskJPM" (link) "#askJPM Does getting roasted on social media feel too harsh a penalty for rigging #LIBOR? Will you lobby Congress to regulate Twitter?" (link) "What's your favorite type of whale? #AskJPM" (link) The company beat its retreat and cancelled the Q&A before Lee had answered a single question. "#Badidea! Back to the drawing board!" a spokesman said in an email to the New York Times. At least 8,000 tweets were sent using the hashtag, and at least two-thirds of them were negative, the Twitter analysis firm Topsy tells the Financial Times. "I think companies sometimes forget that social media belongs to the people," one e-marketing analyst said. "Consumers have control beyond their wildest expectations."