Double trouble at JP Morgan: trader's losses could exceed $7bn

[Prometheus Bound]

Source: The Independent

Nick Goodway , Gideon Spanier Tuesday 22 May 2012

The crisis at JP Morgan escalated yesterday as it emerged its trading losses in London could rise to as much as $7bn (£4.5bn) and the US bank cancelled a share buyback. Fears were growing that the losses could spiral from an initial $2bn, which was declared on 10 May, as JP Morgan struggles to unwind the massive bets made by the so-called "London Whale" trader Bruno Iksil.

In a further blow, chairman and chief executive Jamie Dimon has suspended plans to use the US bank's own funds to buy back $15bn worth of shares. Buybacks are a popular way for firms to use up cash sitting on the balance sheet and prop up the share price.

JP Morgan shares tumbled 82 cents or 2.45 per cent to a new six month-low of $32.67. The bank's value has fallen by a quarter in a year. Mr Dimon insisted that the decision to cancel the buyback was not linked to fears about a possible increase in losses. "You should not interpret this as anything about the size of the loss," he said.

....Rival traders reckon that the losses could be as high $7bn. "The markets know pretty much what JP Morgan has and in what sizes," said one trader.

Edited to add authors and date

Read more: http://www.independent.co.uk/news/world/americas/double-trouble-at-jp-morgan-traders-losses-could-exceed-7bn-7771347.html

[truthisfreedom]

1. It'll be $20B in the end.

Mark my words.

[Kelvin Mace]

11. Verily you speak soothly

The fact that they copped to $2 billion so easily means it is at LEAST ten times worse.

[DisgustipatedinCA]

12. Here's hoping it's 20billion

I'd be interested in seeing "too big to fail", fail.

[McCamy Taylor]

2. Lies. "JP Morgan survived the credit crunch without a bailout."

JP Morgan got the very first bailout. Bear-Stearns.

I swear. Sometimes the MSM acts like we have the attention span of kittens.

[solarman350]

3. So, no way FDIC is backstopping this?

and did JP Morgan completely pay back the loan we gave them before this? In the crash of '29, JP Morgan used up all his available cash in an attempt to prevent the stock market from crashing. Probably because he stood to lose so much if it did. Now, we're seeing it unravel again. Hopefully, we're smarter this time, and will not bail out JP Morgan again. Too big to fail = Too big to be bailed out. Bail you out once, shame on you. Bail you out twice, shame on the rest of us.

[Lasher]

6. Too big to fail = too big to regulate.

Glass-Steagall has not been restored and it's not going to be. The response to the S&L crisis was more deregulation. The cure for the subprime mortgage crisis was more moral hazard. I knew we'd see more consequences of this casino banking, but I was hoping it wouldn't happen so soon.

[BlueToTheBone]

7. Trades are not FDIC insured, are they?

I hope not!

[Kelvin Mace]

10. It will not matter

the tax payer will get boned regardless. They OWN Washington, including the current administration.

[aquart]

4. So they no longer want to buy their own shares?

Well, doesn't that just fill one with confidence?

[alfredo]

5. JP Morgan Chase sign

[Turbineguy]

8. The cannibals

feast on each other.

[RogerShuler]

9. Any Chance . . .

Jamie Dimon gets fired?

[gratuitous]

13. No, he'll retire to spend more time with his family

And get a multi-million dollar send-off from a grateful company.