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JPMorgan Is Tanking After Announcement Of Shock Losses Due To 'Egregious Mistakes'
Business Insider ^ | May 10, 2012, 4:52 PM | Joe Weisenthal

Posted on 05/11/2012 2:23:06 PM PDT by robowombat

Shares of JPMorgan are off over 6% after hours.

The reason? The company has shocked the world by announcing a surprise $2 billion+ trading loss in its synthetic derivatives portfolio. In particular, this paragraph from the company's 10-Q filing is what's causing people to get nervous:

Since March 31, 2012, CIO has had significant mark-to-market losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the Firm previously believed. The losses in CIO's synthetic credit portfolio have been partially offset by realized gains from sales, predominantly of credit-related positions, in CIO's AFS securities portfolio. As of March 31, 2012, the value of CIO's total AFS securities portfolio exceeded its cost by approximately $8 billion. Since then, this portfolio (inclusive of the realized gains in the second quarter to date) has appreciated in value. The company held a conference call starting at 5 PM, where Jamie Dimon insisted that this was a pure trading screwup due to the company's own errors and stupidity and not something fundamental.

Dimon characterized these losses as a result of sloppiness. Linette Lopez and Lisa Du in their liveblog of the call hit on these two points: "We've already changed some policies and procedures as we have gone along."

- Dimon says this has been an egregious mistake, self-inflicted. Violates how he runs the company, this is NOT how he wants to run a business. He's really hammering that this is about an internal blunder, not something more fundamental.

Read more: http://www.businessinsider.com/jpmorgan-is-tanking-after-hours-after-announcement-of-shock-conference-call-and-possible-mark-to-market-losses-2012-5?utm_source=inpost&utm_medium=seealso&utm_term=&utm_content=1&utm_campaign=recirc#ixzz1ubAFGKY7

(Excerpt) Read more at businessinsider.com ...


TOPICS: Business/Economy; Crime/Corruption; News/Current Events; Politics/Elections
KEYWORDS: businessinsider; jpmorgan; zerohedge
"Dimon characterized these losses as a result of sloppiness. Linette Lopez and Lisa Du in their liveblog of the call hit on these two points: "We've already changed some policies and procedures as we have gone along."

HMM?

1 posted on 05/11/2012 2:23:09 PM PDT by robowombat
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To: robowombat
Sloppiness?

That word's worth two hundred million dollars a letter, Jamie.

2 posted on 05/11/2012 2:31:01 PM PDT by Steely Tom (If the Constitution can be a living document, I guess a corporation can be a person.)
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To: robowombat

Apparently these were hedging losses. Traders should know the risks of hedging. Hedging is not a panacea.


3 posted on 05/11/2012 2:39:06 PM PDT by impimp
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To: robowombat
“significant mark-to-market losses in its synthetic credit portfolio”

Mark-to-Market losses are reductions in what the assets are valued at on the company's books. They are not realized(cash) losses. It sounds like they were booking profits based on inaccurate mark-to-market numbers and a trader found out about it and found he could generate big “paper profits” for himself and the company. When they realized they were valuing these assets differently than everyone else they had to write down the value of the assets. Hence, the loss.

4 posted on 05/11/2012 2:51:39 PM PDT by detective
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To: robowombat

It’s small change compared to what Obama lost betting on green companies.


5 posted on 05/11/2012 3:00:35 PM PDT by Brilliant
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To: Steely Tom
Yeah really. Sloppiness? WTF.

Sloppiness is a deli clerk forgetting to close the walk-in fridge - not a CEO losing two BILLION dollars.

6 posted on 05/11/2012 3:01:59 PM PDT by AAABEST (Et lux in tenebris lucet: et tenebrae eam non comprehenderunt)
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To: detective

You are describing the best-case scenario. I hope you’re right. The markets appear to be buying it.


7 posted on 05/11/2012 3:05:19 PM PDT by the invisib1e hand
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To: robowombat; All

I think Jamie Dimon is a straight shooter. Furthermore (or perhaps, ergo), he has been publicly critical of 0. The witch hunt is already beginning. Dimon is NOT one of the Zombies.


8 posted on 05/11/2012 3:15:12 PM PDT by the invisib1e hand
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To: the invisib1e hand

“Furthermore (or perhaps, ergo), he has been publicly critical of 0. The witch hunt is already beginning. Dimon is NOT one of the Zombies.”

Dimon has given tremendous amounts of money to Obama. JPMC has a PAC which supports leftists causes.


9 posted on 05/11/2012 3:20:59 PM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: driftdiver

Nonetheless...


10 posted on 05/11/2012 3:23:03 PM PDT by the invisib1e hand
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To: Brilliant
It’s small change compared to what Obama lost betting on green companies.

I don't believe Zero lost a damn thing...

11 posted on 05/11/2012 3:29:36 PM PDT by who knows what evil? (G-d saved more animals than people on the ark...www.siameserescue.org.)
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To: driftdiver

He opposed Dodd Frank which proves that, however liberal he is, he’s not smoking crack.


12 posted on 05/11/2012 3:37:54 PM PDT by the invisib1e hand
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To: detective

Thus, this was an eyes-open calculated move, not a mistake. “The shooter craps out.......”


13 posted on 05/11/2012 3:53:16 PM PDT by circlecity
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To: robowombat
Y'know, after the last five years, you'd think these einstein banksters would use their fricking heads. But no-- they appear to have learned nothing:

"I have an idea--lets blow a couple billion on a bullshit move and invite even MORE government control! Yeah, that's the ticket!"

14 posted on 05/11/2012 4:05:57 PM PDT by hinckley buzzard
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To: robowombat

Don’t forget that Jamie Diamon was huge Obama supporter and bundler and was considered “Obama’ s favorite banker”.
The timing of this is suspicious to me, Obama is loosing in the polls on his handling of the economy and this will create an opportunity for Obama to pretend to stand up to those much hated bankers and bash Romney because he wants to repeal Dodd Frank.

Jamie Diamon is considered the best in the business, i dont buy that this was “sloppiness”. And $2 Billion is nothing for JP Morgan.

Trust no one.


15 posted on 05/11/2012 4:42:42 PM PDT by PMAS (ABO 2012)
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To: robowombat
I've seen Jaye P Morgan tanked.


16 posted on 05/11/2012 6:23:06 PM PDT by UCANSEE2 (Lame and ill-informed post)
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To: robowombat

Back in the mid 90’s I worked for CSWS, Service company for CSW, a Electric Utility Holding Company.

On the Board of Directors for CSW was a guy who was on the BOD for Enron.

I asked my VP how can that be? He replied that only Enron folks were smart enough to see the big picture.

When you convince folks that you are the expert, that is all you need.


17 posted on 05/12/2012 9:49:46 AM PDT by hadaclueonce (you are paying 12% more for fuel because of Ethanol. Smile big Corn Lobby,)
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To: hadaclueonce

Interlocking Directorates are a big problem.


18 posted on 05/12/2012 9:52:33 AM PDT by dfwgator (Don't wake up in a roadside ditch. Get rid of Romney.)
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