JPMorgan Discloses $2 Billion in Trading Losses

[swag]

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 bank’s assets and liabilities, are expected to weigh on the bank’s 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]

1. Oops.....

...good thing for them they're TBTF, huh?

- K&R

[DCKit]

2. In the meantime, the guys over at Goldman Sachs made an extra $2 billion....

by frontrunning all of JPM's trades.

[FarCenter]

22. It's the hedge funds now that have JP Morgan Chase by the shorts

[sarcasmo]

3. No bailouts JP, and Dimon no bonus for you this year.

[Vidar]

4. And how many billion in bonuses?

[truthisfreedom]

5. What? With all of their computers and analysts and algorithms and whatnot?

How can sh*t like this happen, for real?

[originalpckelly]

6. So much money, so little time to lose it all.

[NeoConsSuck]

7. synthetic credit portfolio ?

could someone please explain what a 'synthetic credit portfolio' is?

[PoliticAverse]

12. A collection of very highly leveraged bets on whether certain loans will be paid off. n/t

[erpowers]

14. Portfolio Based on Another Portfolio

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 JPMorgan’s 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]

8. Idon't know about JP morgan but I can go into the local bank and invest with Goldman Sachs..

and it will be FDIC insured. Go figure.

[CanonRay]

9. So step down, Dimon. Personal responsibility, remember!

[erpowers]

10. Fire Jamie Dimon

Considering his bank lost $2 billion Dimon should be fired. Dimon is the CEO, he should have been on top of this.

[Trillo]

11. What does such a loss mean to their tax liabilities?

[Purveyor]

13. JPMorgan Woes Signal Trouble for Banks, Market: Fast Pros

In the wake of a stunning after hours announcement from JPMorgan, the Fast Money say you may need to re-evaluate everything.

--clip
Although information was still coming together at the time of writing, the Fast Money traders say developments look like they’re a game changer.

“This is the last thing the financials [XLF 14.98 0.06 (+0.4%) ] need,” says trader Steve Grasso.

“It’s 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]

15. Well we all know what they need to do now

Give their "talent" a big bonus so they can retain them...

[brentspeak]

16. And just three weeks ago, Jamie "Bankster" Dimon was saying it was all just a "tempest in a teapot"

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]

17. And they will get bonuses for keeping the losses small.

[AnotherMcIntosh]

18. Is it time yet for another bailout?

That which gets rewarded will get repeated.

[unkachuck]

19. was that $2 billion....

....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]

20. Why Didn't Dodd-Frank Prevent This Sort Of Thing

From happening. Obviously more regulation is needed lest we find ourselves in another "too big to fail" situation.

[hack89]

24. I am not sure Dodd-Frank is fully implemented yet

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]

21. Losing in the London casino

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]

23. "poorly constructed, poorly reviewed, poorly executed, and poorly monitored."

Sounds familiar

[Renew Deal]

25. "it could easily get worse.”

Is Chase built on a house of cards? No bailouts for these guys.

[dbackjon]

26. This is a HUGE story, folks

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.