London Whale Trade Explodes, Current Estimate of JP Morgan Losses as High as $9 Billion. So again, what did Dimon know when?
Under the hot lights at the House Financial Services Committee, he repeatedly brushed off the losses on the failed Chief Investment Office trades as no biggie. Let us remind readers that the size of the CIO’s balance sheet would make it the 8th largest bank in the US and it was running half of JPM’s total risk exposures, so it’s hard to see the failure of oversight as something to be waived off. And now it turns out the losses are going to clock in at a much higher number than the $2 billion that Dimon kept repeating in the hearings. Recall he refused to update that number, maintaining the public would have to wait for the bank’s second quarter earnings release (admittedly, he did signal the final result could come in much higher).
Funny that they’ve now leaked out well in advance of that date. Recall, as we indicated, that JP Morgan can and apparently has been playing accounting games with this portfolio. Occupy the SEC to Jamie Dimon: We Told You So. By Occupy the SEC Jamie Dimon’s plan to enfeeble the Dodd-Frank reforms, specifically the Volcker rule, has blown up spectacularly.
Apparently JPM was so confident that their interpretation of the hedging exemption would prevail, that they got ahead of themselves and operated as if this loophople were in effect. But then things went horribly wrong for them. Michael Crimmins: Why the Cops Should be Knocking on Jamie Dimon’s Door Soon. By Michael Crimmins, who has worked on risk management and Sarbanes Oxley compliance for major banks The scandal surrounding JP Morgan’s losses in its Chief Investment Office is not going away, and for good reason.
Its trading book continues to lose money at an astounding rate. The Truth About JP Morgan’s $2 Billion Loss. Must-Read Background Before we can understand what’s really going on with JP Morgan’s loss (which will probably end up being a lot more than $2 billion), we need a little background.
JP Morgan: In addition, JPM’s CEO Jamie Dimon: Is a Class A Director of the Federal Reserve Bank of New York, which is the chief bank regulator for Wall Street (including JPM). Investigating JPMorgan Chase. JP Morgan investment unit played by different high-risk rules. Monday, 14 April 2014 JP Morgan investment unit played by different high-risk rules 16 May 2012 This content is not included in your subscription package Please contact us to renew or upgrade your subscription.
Sign In Most popular © Thomson Reuters 2014. (Launches in a new window) Close. More Evidence of Lax Oversight of JP Morgan Chief Investment Office. As reporters keep digging into the “London Whale” story, the picture that emerges about the caliber of risk controls and management supervision at JP Morgan only look worse and worse.
The latest revelations comes via the Wall Street Journal. First, that there was no treasurer during the period when the CIO entered into the loss-making trades. The idea that a bank of any size, let alone one as big as JP Morgan, would go for months (five in this case) without a treasurer in place is stunning. Why We Regulate. Managing Risks Means Managing Arguments - Justin Fox. By Justin Fox | 9:52 AM May 23, 2012 So it was Lyme disease that did it!
The tick-borne illness kept JPMorgan Chase’s Ina Drew out of the office for extended periods in 2010 and 2011. And it was during Drew’s absences, according to a richly detailed account in The New York Times, that the bank’s chief investment office, which she ran, began to get into trouble: The morning conference calls Ms. Drew had presided over devolved into shouting matches between her deputies in New York and London, the traders said. Whether this really was the main reason for JP Morgan’s $3 billion (and growing) trading loss or not, it does at least sound like it could be true. The words “risk management” usually evokes less subjective, more data-driven pursuits. As far as falsification is concerned, he thought that statements involving stable propensities — such as, ‘The die has a one in six chance of landing on six’ — could be tested by looking at what happens in the long run.
What Was Not Said During Jamie Dimon's Media PR Campaign. Today's Meet The Press PR damage control campaign orchestrated on behalf of Jamie Dimon by the fawning press was just another attempt at redirection, in which a faux contrite Jamie Dimon promises that as a result of being '100% wrong' about his prior "Tempest in a Teapot" description of the Bruno Iksil debacle, he has learned his lesson, and in tried and true American fashion deserves a second chance.
The rest was filler. What was not said is that the entire business model of the modern US banking edifice, where due to the Net Interest Margin limitations imposed by ZIRP, is one of prop trading as being a glorified hedge fund is the only way the banks can generate a rate of return above their cost of capital. What was also not said was the glaring lies by Blythe Masters from a month ago who swore up and down to CNBC that JPM does not engage in prop trading: "We have offsetting positions.