By MICHAEL J. DE LA MERCED


JPMorgan Chase disclosed on Thursday that a trading group had suffered “significant” losses in a portfolio of credit investments, with the chief executive, Jamie Dimon, estimating losses at $2 billion in a conference call.

“These were egregious mistakes,” Mr. Dimon said on the call. “They were self-inflicted and this is not how we want to run a business.”

The troubles at the unit, the so-called Chief Investment Office, which makes trades to balance the bank’s assets and liabilities, are expected to weigh on the bank’s broader earnings.

For example, the corporate group, which includes the Chief Investment Office, is now expected to lose $800 million in the second quarter, the company said in a filing. Previously, JPMorgan had estimated that the group would report net income of roughly $200 million.

Ultimately, JPMorgan said, the final tally will depend on the markets and other actions by the bank. Mr. Dimon added that it could “easily get worse.”

Shares of JPMorgan were down 5.5 percent in after-hours trading, dragging down other bank stocks.

The trading group has been a focus in recent weeks as questions surfaced about big bets the JPMorgan unit was reportedly making in credit default swaps. Reports emerged in April about a JPMorgan trader in London whose positions were so big that they were distorting the market.

Read more here: http://dealbook.nytimes.com/2012/05/10/jpmorgan-discloses-significant-losses-in-trading-group/

Did they learn NOTHING?

Too big to fail my arse.

Holy batmobile, Robin!

Simon Johnson.
MIT professor; Co-author, '13 Bankers' and 'White House Burning'; Columnist on fiscal affairs

JP Morgan Debacle Reveals Fatal Flaw In Federal Reserve Thinking

Posted: 05/11/2012 8:22 am

Experienced Wall Street executives and traders concede, in private, that Bank of America is not well run and that Citigroup has long been a recipe for disaster. But they always insist that attempts to re-regulate Wall Street are misguided because risk-management has become more sophisticated -- everyone, in this view, has become more like Jamie Dimon, head of JP Morgan Chase, with his legendary attention to detail and concern about quantifying the downside.

In the light of JP Morgan's stunning losses on derivatives, announced yesterday but with the full scope of total potential losses still not yet clear (and not yet determined), Jamie Dimon and his company do not look like any kind of appealing role model. But the real losers in this turn of events are the Board of Governors of the Federal Reserve System and the New York Fed, whose approach to bank capital is now demonstrated to be deeply flawed.

JP Morgan claimed to have great risk management systems -- and these are widely regarded as the best on Wall Street. But what does the "best on Wall Street" mean when bank executives and key employees have an incentive to make and misrepresent big bets -- they are compensated based on return on equity, unadjusted for risk? Bank executives get the upside and the downside falls on everyone else -- this is what it means to be "too big to fail" in modern America.

The Federal Reserve knows this, of course -- it is stuffed full of smart people. Its leadership, including Chairman Ben Bernanke, Dan Tarullo (lead governor for overseeing bank capital rules), and Bill Dudley (president of the New York Fed) are all well aware that bankers want to reduce equity levels and run a more highly leveraged business (i.e., more debt relative to equity). To prevent this from occurring in an egregious manner, the Fed now runs regular "stress tests" to assess how much banks could lose - and therefore how much of a buffer they need in the form of shareholder equity.

In the spring, JP Morgan passed the latest Fed stress tests with flying colors. The Fed agreed to let JP Morgan increase its dividend and buy back shares (both of which reduce the value of shareholder equity on the books of the bank). Jamie Dimon received an official seal of approval. (Amazingly, Mr. Dimon indicated in his conference call on Thursday that the buybacks will continue; surely the Fed will step in to prevent this until the relevant losses have been capped.)

There was no hint in the stress tests that JP Morgan could be facing these kinds of potential losses. We still do not know the exact source of this disaster, but it appears to involve credit derivatives -- and some reports point directly to credit default swaps (i.e., a form of insurance policy sold against losses in various kinds of debt.) Presumably there are problems with illiquid securities for which prices have fallen due to recent pressures in some markets and the general "risk-off" attitude - meaning that many investors prefer to reduce leverage and avoid high-yield/high-risk assets.

But global stress levels are not particularly high at present -- certainly not compared to what they will be if the euro situation continues to spiral out of control. We are not at the end of a big global credit boom -- we are still trying to recover from the last calamity. For JP Morgan to have incurred such losses at such a relatively mild part of the credit cycle is simply stunning.

Read more: http://www.huffingtonpost.com/simon-johnson/jp-morgan-losses-jamie-dimon_b_1508823.html

Like a company that is worth 100's of Gazillions is gonna be affected by loosing 2 Billion.

I bet they ENGINEERED that loss - so they don't have to pay TAXES!!!!!

Jest so the can show to the

WALL STREET =

When you see dancing Pink Elephants it's time to bail folks.......

JPMorgan exec expected to resign, AP source says
PALLAVI GOGOI, AP Business Writer

Updated 06:00 p.m., Sunday, May 13, 2012

NEW YORK (AP) — JPMorgan Chase is expected to accept the resignation of one of the highest-ranking women on Wall Street after the bank lost $2 billion in a trading blunder, a person familiar with the matter said Sunday.

The bank will accept the resignation of Ina Drew, its chief investment officer, the person told The Associated Press, speaking on condition of anonymity because the person was not authorized to discuss the decision publicly.

Drew, 55, one of the highest-paid officials at JPMorgan Chase, had offered to resign several times since CEO Jamie Dimon disclosed the trading loss on Thursday, the person said. Pressure built on the bank over the weekend to accept.

At least two other executives at the bank will be held accountable for the mistake, the person said.

snip

Read more here: http://www.chron.com/news/article/JPMorgan-exec-expected-to-resign-AP-source-says-3554984.php

Jamie Dimon needs to go, too. This so, so, so sounds like Enron to me.

JPMorgan’s Trading Loss Is Said to Rise at Least 50%

By NELSON D. SCHWARTZ and JESSICA SILVER-GREENBERG

The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses.

When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress, fueling faster deterioration in the underlying credit market positions held by the bank.

A spokeswoman for the bank declined to comment, although Mr. Dimon has said the total paper trading losses will be volatile depending on day-to-day market fluctuations.

The Federal Reserve is examining the scope of the growing losses and the original bet, along with whether JPMorgan’s chief investment office took risks that were inappropriate for a federally insured depository institution, according to several people with knowledge of the examination. They spoke on the condition of anonymity because the investigation is still under way.

The overall health of the bank remains strong, even with the additional losses, and JPMorgan has been able to increase its stock dividend faster than its rivals because of stronger earnings and a more solid capital buffer.

Still, the huge trading losses rocked Wall Street and reignited the debate over how tightly giant financial institutions should be regulated. Bank analysts say that while the bank’s stability is not threatened, if the losses continue to mount, the outlook for the bank’s dividend will grow uncertain.

The bank’s leadership has discussed the impact of the losses on future earnings, although a dividend cut remains highly unlikely for now. In March, the company raised the quarterly dividend by 5 cents, to 30 cents, which will cost the bank about $190 million more this quarter.

snip

Read more here: http://dealbook.nytimes.com/2012/05/16/jpmorgans-trading-loss-is-said-to-rise-at-least-50/

Also saw yesterday the FBI has also initiated an investigation. This is significant because it means there could be criminal charges as well.

Saw on the MSN this morning that the FBI is now looking into this loss also....

Can say a lot about that - but then only

Geithner to Dimon: Resign From the Board of the New York Fed

Posted: 05/17/2012 10:27 pm
Simon Johnson.
MIT professor; Co-author, '13 Bankers' and 'White House Burning'; Columnist on fiscal affairs

In an interview Thursday on PBS NewsHour, Jeffrey Brown and Treasury Secretary Tim Geithner had the following exchange:




In the diplomatic language of Treasury communications, Mr. Geithner just told Jamie Dimon to resign from the New York Fed board (here is the current board composition). It looks bad -- and it is bad -- to have him on the board of this key part of the Federal Reserve System at a time when his bank is under investigation with regard to its large trading losses and the apparent failure of its risk management system.

Mr. Geithner's call is a major and perhaps unprecedented development which can go in one of two ways.

If Mr. Dimon resigns, that is a major humiliation and recognition -- at the highest levels of government -- that even the country's best connected banker has overstepped his limits. This would be a major victory for democracy and a step towards reopening the debate on financial reform, including introducing more restrictions on what global megabanks can do.

In modern American politics, symbols and substance are hard to disentangle. The big banks have won many rounds, so many times in recent years -- including with the help of Mr. Geithner at key moments during the Dodd-Frank debate, in subsequent discussions over capital requirements, and with regard to design and potential implementation of the Volcker Rule (which would limit proprietary trading and other forms of excessive risk taking by big banks). If Mr. Dimon resigns, this could help open the doors to a broader reevaluation of power in the hands of Too Big To Fail banks -- and how they undermine the rest of our economy.

If, as seems more likely, Mr. Dimon stays in place, that would be a great victory for the big banks -- and a reminder of who is really in charge of the country. Mr. Geithner will be forced to walk back from his statement; that would not exactly inspire confidence in our officials -- or help President Obama get re-elected.

Keep in mind that Mr. Dimon himself decided to transform the relevant part of JP Morgan Chase into a risk-taking operation -- and it is the people he chose and the systems he put in place that have now blown up.

The entire record of recent interactions between JP Morgan Chase and the New York Federal Reserve will presumably be looked at by investigators -- including the total number of meetings, the precise content, and the involvement of Mr. Dimon himself. For example, how often did Mr. Dimon meet with Bill Dudley, president of the New York Fed, over the past 12 months, either one-on-one or in a group meeting? What exactly was discussed? How did any of these interactions filter down into the supervisory process?

We need an independent investigation of the JP Morgan losses -- as I argued Thursday morning on NYT.com's Economix blog. This investigation should examine, among other things, the relationship between Mr. Dimon, his bank, and the New York Fed.

Who will prove more powerful, Jamie Dimon or Tim Geithner?

http://www.huffingtonpost.com/simon-johnson/geithner-jamie-dimon-resign_b_1526235.html

As they both work for the same outcome (and Master) I predict that nothing will happen and they will collude to concoct more schemes to fleece interest and taxes respectively form the unwitting people of the land!!!

The Truth About JP Morgan’s $2 Billion Loss
By Washington's Blog
Global Research, May 16, 2012

This is a realistic view on what is going on and what Jaime Dimon is up to!!!

www.globalresearch.ca/index.php?context=va&aid=30859

Jamie Dimon Complains More, As JPMorgan Chase Losses Eclipse $30 Billion
by Mark Gongloff

Champion American complainer Jamie Dimon complained on Monday about Wall Street regulation, while also insisting he not be described as a complainer. All the while, his bank's losses, partly resulting from lax regulation, continued to grow.

An initial $2 billion trading loss has likely resulted in a total loss of more than $30 billion, when you include a 19 percent drop in the bank's stock price. By itself, the trading loss alone might balloon to more than $6 billion, according to one estimate.

To strengthen the Cognitive Dissonance Vortex he had created, the JPMorgan Chase CEO's comments came as the ink was still drying on news reports that reminded everybody of why the Wall Street regulation he complains about constantly is necessary in the first place. Namely, the Wall Street Journal reported that a top risk-management officer at JPMorgan apparently had a spotty track record of risk-management. And CNNMoney said estimates of the bank's initial $2 billion loss due to poor risk-management have tripled to at least $6 billion.

But first, to the Dimon Complain-Bot 9000: Speaking at the Deutsche Bank Securities Global Financial Services Investor Conference in New York, Dimon rolled out several of his standard complaints about post-crisis efforts to regulate the financial sector, according to the Wall Street Journal's Deal Journal blog, which live-blogged his comments.

On the Volcker Rule, which -- if it is ever actually put in place in any real way -- would prohibit banks with federally insured customer deposits from being able to blow billions of dollars on stupid market gambles, Dimon warned that regulators should be very careful not to "throw the baby out with the bathwater." Typically in this analogy, which he has used more than once before, Dimon implies that JPMorgan is the squeaky-clean baby and other banks are the nasty bathwater. But now that JPMorgan Chase has done exactly the sort of thing the Volcker Rule was designed to stop, the analogy is less effective -- the baby a bit scummier, if you will.

Dimon also issued his usual dire warnings about how regulation would harm American banks and drive business overseas to places where regulations aren't so horribly constraining. But, amazingly, Dimon also said of regulation: "Please don't anyone write I am complaining about it."

This is the man who has honed complaining about regulation to a fine art. He is the Mozart of Complaining. If you haven't seen it, you should really take a few minutes and watch Hunter Stuart's Huffington Post video mashup of all of the times Jamie Dimon has complained about regulation.

Ironically, the regulations he hates most might have saved his bank at least $2 billion, and possibly $5 billion or even $7 billion. Bad bets on unregulated credit derivatives cost the bank an initial $2 billion, and now Morgan Stanley estimates the losses will rise to $5 billion by the end of the year, the Financial Times's FT Alphaville blog writes. That is $2 billion more than Dimon has publicly estimated, but increasingly nobody believes Dimon on this.

In fact, CNNMoney suggests the losses may have already hit $6 billion or $7 billion, citing traders in the derivatives market, where JPMorgan and its enormous bets are still trapped, being eaten alive by hedge funds.

Dimon, in his comments on Monday, said the bank wasn't going to keep updating everybody on its losses. An easier amount of money to track is the amount of market value that has been vaporized since this episode began. JPMorgan stock has tumbled nearly 19 percent since May 10, erasing nearly $30 billion in shareholder value.

Adding insult to injury, Dimon said that the bank was going to cancel its plans to buy back its stock -- despite the shares now being available at a steep discount -- in order to make sure the bank's capital will be ready to meet new global regulatory requirements.

These developments may not undermine Dimon's arguments that the bank has a "fortress balance sheet," but they won't make shareholders happy. And clearly the bank's reputation for risk management is getting worse by the day.

Today's blow: The guy in charge of managing risk at the unit responsible for the loss is in the spotlight for some past episodes of questionable risk management, the WSJ writes, citing people familiar with the matter:

Irvin Goldman, who was installed as chief risk officer for the Chief Investment Office this past February before being relieved of his duties this month, suffered between $10 million and $15 million in losses on one bet in 2008 in his prior role as a trader for the bank, these people said.

J.P. Morgan halted Mr. Goldman's trading in late 2008 and put him on leave when it learned that regulators were separately probing trading practices at Cantor Fitzgerald, where Mr. Goldman had served as an executive until late 2007, the people said.

Goldman, who declined to comment to the WSJ, has not been accused of any wrongdoing.

But, hey, look on the bright side: The Telegraph reports that Ina Drew, the woman in charge of the unit responsible for the loss, will go away with $32 million in cash and going-away prizes.


http://www.huffingtonpost.com/mark-gong ... 33126.html

Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand.

Putt's Law

Personified!

Dimon: JPMorgan traders didn't understand risks

By Charles Riley @CNNMoneyInvest June 13, 2012: 10:12 AM ET

NEW YORK (CNNMoney) -- JPMorgan Chase CEO Jamie Dimon told Congress Wednesday that the bank's massive loss can be blamed on insufficient risk controls and a failure by traders to understand the bets they were placing.

Dimon both defended the bank, which he says will still be "solidly profitable" in the second quarter, and sounded a note of contrition before members of the Senate Banking Committee.

"We have let a lot of people down," Dimon said, "and we are sorry for it." (Sorry you got CAUGHT!)

snip

Sen. Tim Johnson, the committee's chairman and top Democrat, asked Dimon, who months ago dismissed controversy over the trades as a "tempest in a teapot," what the bank's motives were.

"How can a bank take on 'far too much risk' if the point of the trades was to reduce risk in the first place?" Johnson asked. "Or was the goal really to make money?" (Ding, ding, ding!)

Dimon's opening statement provided a brief sketch of what the company now believes went wrong, starting with a trading strategy within the firm's chief investment office that was "not carefully analyzed."

Some of the blame also fell on the traders themselves, who Dimon said "did not have the requisite understanding of the risks they took."

snip

Read more here: http://money.cnn.com/2012/06/12/investing/jpmorgan-jamie-dimon-testimony/index.htm?hpt=hp_t1

Oh PUHLEASE! This is just about the lamest excuse before Congress I've ever heard in my life.

Thanks, Jamie Dimon, for my first good, hearty laugh of the day. Arse hole!

How Jamie Dimon hid the $6 billion loss
By Stephen Gandel, senior editor
July 13, 2012: 1:08 PM ET

FORTUNE -- Here is perhaps the most amazing thing about JPMorgan Chase's (JPM) $5.8 billion trading loss: Take a look at the firm's overall results, and it's like the London Whale's misstep, one of the largest flubs in the history of Wall Street, never happened.

Back in mid-April, about two weeks before talk of the trading losses emerged, JPMorgan was expected to earn $1.21 a share in its second quarter. On Friday, JPMorgan reported that it had, Whale and all, earned exactly that.

How the bank appears to have offset the huge trading loss is a prime example of how complex and malleable bank profits actually are, and how much they should be believed. JPMorgan's quarter should give fodder for accountants to talk about for some time.

"Yes, I have seen these results, but I have also seen how the sausage is made and I am worried that I might get food poisoning in the future," Mike Mayo of Credit Agricole Securities and author of the book Exile on Wall Street told Dimon in a meeting with analysts following the bank's earnings release.

Sure some of JPMorgan's businesses were strong. Profits in its mortgage operations, helped by falling interest rates, rose by nearly $1.3 billion. But a good deal of JPMorgan's earnings came from some shifting of losses and an assumption that things for the bank, and the economy in general, are about to get a good deal better. That assumption might prove right, but it could also add to losses in the future.

So how do you make a nearly $6 billion loss go away? First stop taxes. The bank said that the London Whale's blunder cost the bank $4.4 billion in the second quarter alone. But that's before taxes. After it pays taxes, though, JPMorgan says the loss will shrink to just over $2.7 billion, which means the bank plans to take a $1.7 billion write off from Uncle Sam. Like any loss, banks are allowed to use trading blunders to offset taxable profits elsewhere in the bank. The question is the rate. At $1.7 billion, JPMorgan is writing off roughly 38% of the loss. That's not that out of line with the U.S. corporate tax rate, but it's a far larger percentage of profits than most companies actually pay. Nonetheless, on taxes alone, the bank was able to shrink the London Whale's wake to $4.1 billion.

snip

Finally, the bank pulled another classic loss hiding move: Say it happened sometime else. Just before the bank released its earnings, it announced that it was restating its first quarter earnings. JPMorgan now claims more of the London Whale's trading losses happened in the first quarter, $459 million to be exact - or just slightly more than what Dimon needed to fill the gap - than it earlier thought.

And, voila, with that, the London Whale disappeared from sight, or at least from the horizon of JPMorgan's bottom line.

"I think they did as much manipulation as they could have to hide the loss," says Christopher Whalen, who follows bank stocks for Tangent Capital Partners. "Some businesses were strong, but I don't think they would have tried so hard to boost earnings if the London Whale didn't exist."

Read more here: http://finance.fortune.cnn.com/2012/07/13/jpmorgan-hid-london-whale/?source=cnn_bin