JP Morgan Chase trading loss

Jamie's Round Up

rounduplassoThe Senate Committee on Banking held a hearing, A Breakdown in Risk Management: What Went Wrong at JPMorgan Chase? They had one witness, JPMorgan Chase CEO Jamie Dimon.

This one man apology show is about the $2 billion or greater trading loss JPMorgan Chase incurred due to speculative derivatives.

Truth be told the hearing was softball, not a grilling. This should be no surprise since JPMorgan Chase gives a lot of campaign contributions including those on the Senate Banking Committee.

Dimon revealed very little about the trade and not much more about his knowledge of it. He refused to discuss details of it, lest he reveal secrets to competitors -- who already know all about the trade and have been hammering JPMorgan on it, adding to the bank's losses. But the committee didn't challenge him on that, even after he turned down an offer to close the hearing to the public.

Bloomberg's story quote implies the Senators plain don't understand derivatives:

Jamie Dimon Eats $2 Billion Worth of Crow

If you are the CEO of a major global bank and you have to announce a $2.0 billion trading loss, you will no doubt feel that the shareholders, regulators, and reporters are all against you. But if you announce that the loss occurred in a portfolio that just six weeks earlier was the subject of criticism in the press, and which you described as nothing more than “a tempest in a teapot”, you are entitled to feel that the gods are against you.

The gods definitely have it in for Jaime Dimon, CEO of JP Morgan Chase, the legendary “fortress balance sheet” bank that prides itself on having avoided problems during the housing bust and credit crisis of 2007-2008. Someone inside the bank blew a large cannonball through the bank’s fortress walls, and it seems likely to have been “the Whale” of the credit derivatives market, JP Morgan’s Bruno Michel Iksil.