JPMorgan Discloses $2 Billion in Trading Losses
Source: New York Times
JPMorgan Chase disclosed on Thursday that a trading group had suffered significant losses in a portfolio of credit investments, with chief executive Jamie Dimon estimating losses at $2 billion in a conference call.
These were egregious mistakes, Mr. Dimon said on the call. They were self-inflicted and this is not how we want to run a business.
The troubles at the unit, the so-called Chief Investment Office that makes trades to balance the banks assets and liabilities, are expected to weigh on the banks broader earnings.
For example, the corporate group, which includes the Chief Investment Office, is now expected to lose $800 million in the second quarter, the company said in the filing. Previously, JPMorgan had estimated that the group would report net income of roughly $200 million.
Ultimately, JPMorgan said the final tally will depend on the markets and other actions by the bank. Mr. Dimon added that it could easily get worse.
Read more: http://dealbook.nytimes.com/2012/05/10/jpmorgan-discloses-significant-losses-in-trading-group/
DeSwiss
(27,137 posts)...good thing for them they're TBTF, huh?
- K&R
DCKit
(18,541 posts)by frontrunning all of JPM's trades.
FarCenter
(19,429 posts)sarcasmo
(23,968 posts)Vidar
(18,335 posts)truthisfreedom
(23,147 posts)How can sh*t like this happen, for real?
originalpckelly
(24,382 posts)NeoConsSuck
(2,544 posts)could someone please explain what a 'synthetic credit portfolio' is?
PoliticAverse
(26,366 posts)erpowers
(9,350 posts)As Far as I know it is a portfolio based on an actual portfolio.
"Synthetic credit products are derivatives that generate gains and losses tied to credit performance without the owner buying or selling actual debt. The losses occurred as the company sought to unwind a portfolio of the instruments used to hedge JPMorgans credit exposure."
http://www.bloomberg.com/news/2012-05-10/jpmorgan-chase-says-cio-unit-suffered-significant-loss.html
For a better explanation you might want to watch Money, Power, and Wall Street, which was an episode of Frontline.
http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/
peace13
(11,076 posts)and it will be FDIC insured. Go figure.
CanonRay
(14,101 posts)erpowers
(9,350 posts)Considering his bank lost $2 billion Dimon should be fired. Dimon is the CEO, he should have been on top of this.
Trillo
(9,154 posts)Purveyor
(29,876 posts)In the wake of a stunning after hours announcement from JPMorgan, the Fast Money say you may need to re-evaluate everything.
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Although information was still coming together at the time of writing, the Fast Money traders say developments look like theyre a game changer.
This is the last thing the financials [XLF 14.98 0.06 (+0.4%) ] need, says trader Steve Grasso.
Its going to raise questions not only at JPMorgan but across the entire industry, adds Joe Terranova. It makes me wonder if there are other portfolios that need to be marked to market.
Money pros will ask, what is the impact? And how far does it extend? Who else holds what appears to be lousy paper?
MORE...
http://www.cnbc.com/id/47372660
zeemike
(18,998 posts)Give their "talent" a big bonus so they can retain them...
brentspeak
(18,290 posts)The trading group has been a focus in recent weeks as questions surfaced about big bets the JPMorgan unit was reportedly making in credit default swaps. Reports emerged in April about a JPMorgan trader in London whose positions were so big that they were distorting the market.
Mr. Dimon played down the significance. In a conference call on April 13, he called the matter a complete tempest in a teapot.
Every bank has a major portfolio. In those portfolios you make investments that you think are wise to offset your exposures, Mr. Dimon said in the April call. At the end of the day, that is our job is to invest that portfolio wisely, intelligently over a long period of time to earn income and to offset other exposures that we have.
Now, the portfolio is wreaking havoc at the bank. In its filing on Thursday, JPMorgan pointed specifically to problems with its bets on credit.
ChairmanAgnostic
(28,017 posts)AnotherMcIntosh
(11,064 posts)That which gets rewarded will get repeated.
unkachuck
(6,295 posts)....or $2 trillion?....$2 billion is pocket change to jpm....have they talked to timmy?....he'll cover their bets; he always has, timmy is their kind of guy....
DallasNE
(7,403 posts)From happening. Obviously more regulation is needed lest we find ourselves in another "too big to fail" situation.
hack89
(39,171 posts)I know the law has was passed but I don't think the various regulatory agencies have issued the detailed regulations. I know the law is extremely complex so it would not surprise me if it takes awhile for it to be fully in place.
FarCenter
(19,429 posts)This is "the Whale", Bruno Iksil. There ought to be a law against US banks trading in London. It's what killed AIG. It was also where Lehman was dressing its books up every quarter.
Is JPM Staring At Another $3 Billion Loss?
http://www.zerohedge.com/news/jpm-staring-another-3-billion-loss
JPMorgan: whale harpooned?
http://ftalphaville.ft.com/blog/2012/05/10/995211/jpmorgan-whale-harpooned/
Whale Sushi On The Menu At JPMorgan Executive Lunchroom For Next Few Months
http://dealbreaker.com/2012/05/whale-sushi-on-the-menu-at-jpmorgan-executive-lunchroom-for-next-few-months/
underpants
(182,806 posts)Sounds familiar
Renew Deal
(81,859 posts)Is Chase built on a house of cards? No bailouts for these guys.
dbackjon
(6,578 posts)Exhibit A as to why Glass-Steagel needs to be reimplemented.
Rich people gambling with OUR money.
Investment banks and regular banks never should have been allowed to mix. They need to be reseparated.