JPMorgan Trades Lop Off $27 Billion, Wall St. says so what…

Since JP Morgan lost $2B in derivatives last month the resulting slide in their stock value has erased a mere $27B off their books.  So, have they learned their lesson yet?  It’s obvious they have not.  This type of trade wasn’t supposed to be happening any more period, but it did & they got caught and burnt.  Wonder what would have happened if no one noticed…wonder how many others may be sliding under the radar…  There can not be any more bailouts, no more “too big to fail” time to let the bad apples rot and the good apples flourish.  Regulation is a farce.  If any exists applicable to such risky behavior it lacks any teeth hence is unenforceable, a mere bunch of words, no beef.  Pathetic.

Here’s the wisest comment in the story:

Executives who say the loss is small for a firm that earned $19 billion last year are missing the warning it represents about unwieldy large lenders, said Richard Sylla, a financial historian at New York University’s Stern School of Business.

“Even a great banker like James Dimon can’t really manage such a huge operation,” Sylla said. “They convince themselves that everything is fine because they’re making money.”

U.S. Comptroller of the Currency Thomas J. Curry told the Senate Banking Committee last week that the loss raises “questions about the adequacy and rigor” of the bank’s risk management. Treasury Secretary Timothy F. Geithner last month called it a “pretty significant risk-management failure.”

Basically we can safely assume nothings changed on Wall Street.   Business as usual.

Here’s the article from Bloomberg.

JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon plans to testify before Congress this week about his firm’s $2 billion trading loss. His Wall Street colleagues don’t understand why.

“Occasional losses are inevitable,” said Blackstone Group LP (BX)’s Stephen A. Schwarzman, 65, CEO of the largest private- equity firm. “Publicly excoriating JPMorgan serves no purpose except to reduce people’s confidence in the financial system.”

JP Morgan Chase Chairman Jamie Dimon. Photographer: Spencer Platt/Getty Images

The loss sliced $27 billion from JPMorgan’s market value in the month after the May 10 disclosure, while triggering at least five federal probes and two planned Capitol Hill hearings with Dimon. It also renewed debate about whether curbs on trading by bankers were tightened enough after their wrong-way bets pushed the system to the brink of collapse in 2008.

Executives, lobbyists and analysts said in more than a dozen interviews that the public stir is an overreaction to a minor misstep.

“I kind of shrug,” said Bill Archer, 58, a former co- chairman of Goldman Sachs Group Inc. (GS)’s capital markets committee and now a partner at buyout firm Veronis Suhler Stevenson LLC in New York. “That’s just the way the world is.”

JPMorgan shares dropped 17 percent through last week after the New York-based bank, the largest in the U.S., disclosed the losses on credit derivatives held by its chief investment office. Dimon, 56, had shifted the unit from a conservative manager of unused cash into a profit center that bet on riskier assets, former employees have said. Some wagers became so large that they were driving prices in the $10 trillion market and couldn’t easily be unwound, Bloomberg News reported.

Follow the link in the title for the full story.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: