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Three JPMorgan (JPM) execs connected to its $2B trading loss will leave the firm this week,...
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Sunday, May 13, 2012, 4:14 PM ETThree JPMorgan (JPM) execs connected to its $2B trading loss will leave the firm this week, according to the WSJ. Bruno Iksil - "The London Whale" - will be stripped of trading duties.
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One would think after the fiasco of the 2007-2008 financial crisis, the too-big-to-fail banks would have learned a lesson about risk management --- but, no, here we are again with JP Morgan Chase losing $2+ billion of their "own" money --- and under the leadership of CEO Dimon who is one of those most vocal about limiting the banks' proprietary trading under proposed legislation.
The shareholders, bondholders and managements of these too-big-to-fail banks should pay the price for "mistakes" such as JP Morgan Chase's recent fiasco. However, the banks are in existence to serve the needs of the general economy and to facilitate the movement of funds between individuals/entities wanting to invest monies (aka, depositors) and those needing to borrow those resources. Proprietary trading of their "own" funds has little place --- those funds should be distributed to the shareholders who can then invest in riskier asset classes under their own decision regimen.
This approach would take much of the burden off US taxpayers to correct the " sloppy” and “stupid" decisions that have been made by the too-big-to-fail banks in the post-Glass-Steagall era.
If this is your sense of appropriate behavior then Obama should resign immediately and refund all his salary of the last 3 years along with any benefits going forward. Along with most members of congress. They wasted Trillions of US wealth. At least JPM is paying it out of their own profits which looks to be less than 3 months of income.
The Fed's low interest rates are related to bailing out our massive federal deficits not banking. A steeper yield curve advantages the banks.
Might as well make a clean sweep............comments about Obama and Congress are dead on. They have squandered Trillions.
Cut all executive compensation so there is something left for the lowly shareholders like myself. That goes for the other banks as well
======================...
You are shareholder, you cut
As customer I like Wells Fargo and Patelco credit union
As investor I am not investing in banks and rather prefer them out from public and into strong private hands
when something is worth nothing, how can you consider it a loss when its gone?
They should strip his balls is more like it.
If you want to run a hedge fund, move to Greenwich and do so. But you are a banker and you are dealing with tax-payer insured depositors' money. You need to be more responsible in that role.
Here is what is and is not allowed.
Forget about Dimon's role as JPM Chrm, & CEO
As Chrm on the Federal reserve Bank of New York, he is in violation of Conduct for Directors of Federal Reserve Banks and Branches.
See:
URL: http://1.usa.gov/ITMDX5
And I agree, Obama should resign because he cost thousands of auto industry workers their jobs and scared employers into not hiring during the recovery. He's made a trillion dollar mistake on ObamaCare. If that isn't enough to get you fired, what is?
Also, the CEO of Yahoo is being fired for lying on his resume.
Obama, the Divider in Chief, has lied on his resume every day he's been in politics. Time for him to go, too.
Who are all these people as I need to categorize people and pick an enemy and I don't know where to turn.
The 60% prop up the rest of them.
Chain of custody issues, as Chrm & CEO, Dimon is responsible.
$4 Bil USD in expected revenue doesn't matter, that's a weak argument. For that matter you could also say, you borrowed $2 Bil USD form the bank without permission, and returned ALMOST all of it before anyone noticed, (fill in any random reason).
That is what this is about.
Even more damaging than that:
As Chairman of the New York Federal Reserve Bank, he has lost credibility. That means weakness in a time they wish to project strength, Dimon becomes the variable in the equation.
Should be a conflict of interest anyway, being Chairman of the Federal Reserve Bank which governs the investment bank you are also Chairman of?
That almost sounds Germany, nu?
Looks like that US Treasury seat they've been holding for him is in the crapper as well.
By that logic a small bank or CU that makes a bad investment (i.e. loan or hedge) should fire their CEO because chain of custody leads to the CEO.
This is nonsense.
That's called accountability, right? Used to be, I am old.
Sorry, what's that word again for "taking responsibility for your own actions as well as having total control over your Managers and subordinates?"
Yeah, accountability.
100% TOTAL CONTROL, THAT IS THE JOB.
Even more so in a small bank, sack the CEO, ASAP!
It's all about containment, and what the shareholders want, it's their ship, he's just the guy at the helm.
Pick your battles I guess?
We have structured our banks, bankruptcy laws, accounting codes and tax code to take losses to encourage some risk taking. If you want zero losses then prepare for less loans and a smaller economy. Never mind that shareholders will also lose.
Our economy has not done bad over many decades with this approach. If you have a case study of an alternative approach that is better then bring it on.
Our system is specifically structured to support and encourage risk taking. Other countries dream of such a market. The volume in opening 5 mins. on NYSE is higher than most European Market volumes for a month, combined.
Of course their is risk taking, but.... there are also stop / loss settings on most investment software, right?
You are correct, our economy in the US is very resilient, more so than Europe.
2 Billion USD @ JPM Chase, is the tip of the iceberg.
When they whip out the exposures to Greece, you will fall out of your chair. I will say 100 BIL USD MINIMUM will be the fallout ALONE.
I understand there is a gray zone, however we have to etablish a clearer pain threshold, I am sure you will agree.
Total: $3 Bil in losses and counting.
Fix it and move on.
Jamie tends to over estimate losses anyways so let's see what they really report by August.
Backpeddling before Congress won't cut it, he will need to exercise his rights under the 5th Amendment no doubt, or use a telephone joker if he gets confused again.
How humiliating to hear silence in a room full of cowardly fellow investors in Tampa, sickening.
If $3 BIL USD is nothing, fine.
I have an idea to help Mr. Dimon put it in perspective:
* Tell the Board of Directors they won't get paid for the next 25 years, to offset that $3 BIL USD, see how important money is to them then.
Dimon's $23 MIL USD Salary........less than nothing, according to his definition of $3 BIL USD being "nothing".
Defend them, and him all you want, but it will not change the fact that NO MONEY IS THE "BANK'S MONEY" be clear on that,
it is "SHAREHOLDERS MONEY", we own that Bank, not the Board.
You don't understand banking very well and are becoming emotional.
Most articulate? Sounds like he has a mouthful of marbles, and due to a low self esteem problem, speaks far too quickly which lends credibility to my observation.
I understand banking better than most, that you have misunderstood. Their ONLY function, is to accept deposits and make loans, where by they derive a profit from the difference in the interest rates paid and charged, respectively.
Banks create money in the economy by making loans, and the amount of money that banks can lend is directly affected by the reserve requirement set by the Federal Reserve.
So...........when you are Chairman of an Investment Bank, AND subsequently Chairman of the Fed Reserve Bank which governs it, THAT is a conflict of interest, as the reserve requirement is called into question.
With $ 2.3 Trillion USD in Assets, ......AND...... $728 BILLION in Debt, one needn't be a financial savant to realize there is a rotting corpse here.
Read this:
URL: http://1.usa.gov/ITMDX5
OR.......... download it from FED website yourself.
He's been called on the carpet now, and clearly NY Fed (who effectively THE FED) will have to cut him loose as an act of containment, as FED has enough natural enemies. People are ALWAYS expendable.
His biggest mistake was rushing to do an interview and say "sorry W E were stupid, W E screwed up."
Always go to ground when confronted or attacked, first page of Standard Operating Procedure, any corporation in the world.
So....now having flunked breakfast, it looks like "Dimon's ass sandwiches" are on the menu for the next luncheon of the Senate Banking Committee.
Want to see it? I can get you in.
DISLAIMER:
I never mix emotion with business, except on Narcissistic Friday, OR EVERY FRIDAY in my office.
I remember my Granny used to say:
"Be ice cold and calculating, kick everyone who is down, that's the nature of the game."
However, the "Retained Earnings Master Account" is there to remind them of past mistakes and the ensuing operating demise, IAW the IFRS.
Investors and business partners, including vendors and customers, heed retained earnings and shareholders’ equity to gauge the corporate financial standing.
Think of it as our shovel against their load of crap.
http://bit.ly/KHkbeX
See that $728 BILLION USD in Debt they don't want to talk about?
Assets - Liabilities = ? Net Worth, of course.
Here's a free lesson:
* In the 3rd Grade we are taught that, "Net Worth" is the difference between an Corporation's total assets and total liabilities.
Do the math hero, what does it say?
BIG TROUBLE is what is says, JPM is teetering on insolvency, and the $2 BIL they dismiss as nothing, is higher than the bank's entire net worth!
Read it again.
We know what a Balance Sheet is and is not, never 100% accurate, (point taken), but offbook debt, will make these figures far worse.
JPM Chase is obviously being kept alive through the actions of Dimon as Chrm of NY FED, making money available for JPM Chase where he is also Chrm. This point has been raised and will be addressed in Washington when he appears in June.
Get your track shoes on, Bank Run pending.
Moooah ah ah!
Appears to me that Equity is just shy of $200 Billion and their earnings are around $4 Billion plus per quarter.
Want to place any bets on the Senate hearing?
I forgot to mention the $190 Billion USD exposure to Greece.
Have to admit though, that Balance Sheet was a surprise, nu?
And London is reporting losses are now up to $5 Billion USD for the CDX IG9 transaction executed by the CIO Office in London.
As far as Senate Hearing, I think we both know it's a slap on the wrist that's being planned, (some may have accounts with JPM or a Mortgage), so they will have a pre-scripted dialogue.
I do enjoy your comments, it shows your concern, and that is always a good thing. At least we are checking if nobody else is, right?
DISCLAIMER:
My comments are meant with good natured sarcasm, and are in no way representative of my "true" narcissistic nature.
Good Luck on markets to day.
Good business!
The CDX IG9 disaster has wiped out more than $25 Billion USD of JPMorgan’s Market Cap so far. Shares of the bank slid 0.45% to $33.78 Friday morning, leaving them up less than 2% on the year.
He (Dimon) is on his way out, no other alternative. Not knowing is not a defense, rather an example he has lost oversight and therefore, control.
The only important question is why JPM risk management has failed to realize that the market position involved was not manageable.
I think this has to do with illiquid tradable assets that should be regulated differently forward
Dimon is well respected. This loss will cost him some of his outsized reputation but he is still regarded as America's top banker.
At the end of the day, this event is not that big a deal.
The hedge still leaves a long $7B gain in its AFS book , even after the $2B loss . Will be interesting to see how FAS 157 mark -to-market will be received if this turns into a gain .... will all the hand-wringers shut up then ? ? ?
yet Congress forces Dimon to brief them , instead of their telling the US taxpayer what they're losing money on
another diversion from our idiotic representatives