It turns out that JPMorgan Chase had a risk oversight committee on its board of directors. There were individual risk managers at the various offices as well, but this board was designed to provide oversight for the entire operation. Or, if you prefer, it was designed to pretend to show that JPMorgan Chase cared about risk oversight. That’s clear from who they put on the board:

The three directors who oversee risk at JPMorgan Chase & Co. (JPM) include a museum head who sat on American International Group Inc.’s governance committee in 2008, the grandson of a billionaire and the chief executive officer of a company that makes flight controls and work boots.

What the risk committee of the biggest U.S. lender lacks, and what the five next largest competitors have, are directors who worked at a bank or as financial risk managers. The only member with any Wall Street experience, James Crown, hasn’t been employed in the industry for more than 25 years.

Somehow, I don’t think that being President of the American Museum of Natural History in New York, while being a nice job and all, qualifies you to oversee risk at a megabank.

The fact that all of the other big banks at least have someone with knowledge of the industry on their risk committees shows how JPMorgan Chase really didn’t take it seriously. They had wonder boy Jamie Dimon, and they knew how to be careful with their risk. And then the Fail Whale trades came.

Of course, it’s not like the risk oversight committee that is the House Committee on Financial Services in Congress does much of a better job. The banking industry is lousy with Potemkin villages when it comes to oversight and regulation.