Skip to comments.JPMorgan Chase acknowledges $2B loss in trading portfolio
Posted on 05/10/2012 8:58:15 PM PDT by Olog-hai
JPMorgan Chase, the largest bank in the United States, said Thursday that it lost $2 billion in the past six weeks in a trading portfolio designed to hedge against risks the company takes with its own money.
The companys stock plunged almost 7% in after-hours trading after the loss was announced. Other bank stocks, including Citigroup and Bank of America, suffered heavy losses as well.
The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought, CEO Jamie Dimon told reporters. There were many errors, sloppiness and bad judgment.
The trading loss is an embarrassment for a bank that came through the 2008 financial crisis in much better health than its peers. It kept clear of risky investments that hurt many other banks.
The loss came in a portfolio of the complex financial instruments known as derivatives, and in a division of JPMorgan designed to help control its exposure to risk in the financial markets and invest excess money in its corporate treasury.
(Excerpt) Read more at nydailynews.com ...
” The loss came in a portfolio of the complex financial instruments known as derivatives, and in a division of JPMorgan designed to help control its exposure to risk..”
Never before has Wall Street been so able to do whatever they want, with no one paying attention.
I saw that phrase and wondered exactly the same thing.
JPM can borrow for 0% the money that we borrowed at 2-3 percent. Then they can loan it back to us for another 2-3 %.
With a game like that then what do they have to worry about.
“The loss came in a portfolio of the complex financial instruments known as derivatives...”
What is that word Obama uses whenever something bad happens that Conservatives can see coming but he can’t? Unforeseen?
Except that doesn’t sound right - having a brain fart at the moment.
The banks get dollars at or near 0% but they have to control risk. Whole lot of plate spinning going on. I’m thinking the entire banking system is engaged in something like a fraudulent conveyance. Us Muppets pay for it on a time delay through taxation, austerity, and inflation. I know this isn’t an original idea but it just all of a sudden made sense to me.
This is an election year, and another economic bank related meltdown is simply not possible. The MESSIAH must not be harmed by bad economic news.
Expect the unexpected....
The FED must step in to restore confidence and hide all problems. Expect the talking about gay marriage to ratchet up 4-5 notches to cover it.
Now, as many of us howled at the time, the roosters have come home to roost and the roster in CONgress is still filled with too many of the creeps that let it happen... Like Lugar and Hatch (for instance) who've been there way too long!!! (and of course Dodd and Frank)
Essays on Political Economy. (by M. Frederic Bastiat, prior to 1874)
“That Which Is Seen, and That Which Is Not Seen.”
In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause—it is seen. The others unfold in succession—they are not seen: it is well for us if they are foreseen. Between a good and a bad economist this constitutes the whole difference—the one takes account of the visible effect; the other takes account both of the effects which are seen and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil.
In fact, it is the same in the science of health, arts, and in that of morals. If often happens, that the sweeter the first fruit of a habit is, the more bitter are the consequences. Take, for example, debauchery, idleness, prodigality. When, therefore, a man, absorbed in the effect which is seen, has not yet learned to discern those which are not seen, he gives way to fatal habits, not only by inclination, but by calculation.
This explains the fatally grievous condition of mankind. Ignorance surrounds its cradle: then its actions are determined by their first consequences, the only ones which, in its first stage, it can see. It is only in the long run that it learns to take account of the others. It has to learn this lesson from two very different masters—experience and foresight. Experience teaches effectually, but brutally. It makes us acquainted with all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves. For this rough teacher, I should like, if possible, to substitute a more gentle one. I mean Foresight. For this purpose I shall examine the consequences of certain economical phenomena, by placing in opposition to each other those which are seen, and those which are not seen.
Foresight is necessary for good leadership. Name a POL who has that, or the character and honesty that allows “foresight” to be developed.
Don't worry. The FDIC will cover it.
(I also ruin lots of jokes by forgetting the punch line!)
And, overwhelming supported by the Dems and GOP.
Thanks for a great essay. The concept of “knee jerk” liberals fit right in with his thoughts. (”Poor people? Raise the minimum wage!!!”) along with 999 other similar thoughts and actions.
“Name a POL who has that, or the character and honesty that allows foresight to be developed.”
I think Palin has it.
Even when the market in America has ceased for the day, it's still going on in other parts of the world. London. Tokyo. Singapore. Trading takes place twenty-four hours a day somewhere on earth. That's why your stock might close at 'X' when you go to sleep, but be lower when you wake up.
Yep, and Palin is a private citizen now, not a POL.
She still carries great influence.
There is much more in Bastiat’s essay, I only excerpted 3 paragraphs.
He fully understood Socialist. Even prior to 1874 he understood why Socialism and Socialists fail. They ALWAYS FAIL.
There are many exchanges. Ones that trade Chase after the NYSE closes are called...
"Even when the market in America has ceased for the day, it's still going on in other parts of the world."
At the end of the day mutual funds have to settle out, also, buying and selling.
Then the DOW never opens at the same price it closes, yet it only reflects American prices? In fact the opening price reflects the first transactions of each component after the market opens. If it takes a minute or two for each of the 30 DOW Industrials to transact, there is no price for a minute or two.
Now, that opening transaction will surely reflect overnight trading prices.
if government is willing to loan you a billion dollars at 0% interest rate, would you take it? I take as many billions as they’re willing to give me, because however the loan turn out I end up the winner
Just be careful though. After about the tenth loan they MIGHT get wise that you are using much of that loan to pay off the earlier loans.
not all. just the big banks
two billion to JPM is two bucks to you and i.
PARIS (Reuters) - Stock index futures were down on Friday, pointing to a lower open on Wall Street, after JPMorgan Chase & Co stunned investors with news of “significant mark-to-market losses” that it said could “easily get worse.”
My understanding is that they lost 2 billion in just 6 weeks.
Who is minding the store there?
Is obama about to “find” a whole new pile of cash in their reelection fund?
Don’t forget, all the bucks from MF Global still havent been found and no one has been held accountable.
Actually, they’ve been doing pretty much whatever they want all along; it’s just never been this obvious before.
They’ve been able to do what they want since the repeal of Glass-Steagall. The fact that they’re powerful enough (read: they can buy enough politicians) to prevent the re-instatement of that law and the creation of further regulations to keep up with the financial unicorns, I’m sorry, products, they invent out of thin air is what’s appalling, but not suprising. Since the “financial crisis”, the big banks are bigger than before, and the derivatives market is as well. They’ll tank again, and we’ll bail them out again. That cycle will repeat until they go down so hard we can’t bail them out, and then we’ll be in another Great Depression, scratching our asses wondering how anybody could let that happen. But hey, at least we’ll be “pro-business” until then, free of pesky banking regulations that are anathema to our way of life.
3.37(8.27%) 10:43AM EDT - Nasdaq Real Time Price
Jon Corzine just stole billions of dollars. That’s not capitalism. There is supposedly a group protesting Wall Street, and they have never once mentioned him.
No, it’s not capitalism and neither was Madoff. One need look no further than the Chicago Carbon Exchange to see how ridiculous the market has become; the sanctioned trading of carbon credits......fairy dust. Thank goodness that was nixed. Apparently, we haven’t learned anything from credit default swaps.
“Mistakes were made.”
The beauty of the con is that that we only acknowledge the “other side’s” transgressions. So everybody gets away with it.