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Dimon on CIO activities: JPM has suffered a $2B loss in the synthetic credit portfolio. "The...

Dimon on CIO activities: JPM has suffered a $2B loss in the synthetic credit portfolio. "The strategy was flawed ... There were many errors, sloppiness, and bad judgment ... risk managers are fully engaged in helping to monitor the current portfolio." He goes on to say volatility could remain high over coming quarters and could cost the bank another $1B.
Comments (47)
  • Archman Investor
    , contributor
    Comments (2429) | Send Message
     
    $ 2 Billion loss. Only another $7 trillion in derivatives to go and JPM will finally be out of business. LOL.
    10 May 2012, 05:15 PM Reply Like
  • Angel Martin
    , contributor
    Comments (1305) | Send Message
     
    actually it's 70 trillion...
    http://bit.ly/KrgnxQ

     

    see table 1 about half way down
    10 May 2012, 10:42 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2542) | Send Message
     
    Out of all the banks, who would have thought JPM would have the surprise $2 billion loss?
    10 May 2012, 05:17 PM Reply Like
  • WMARKW
    , contributor
    Comments (10307) | Send Message
     
    Gee, what would it have been without MF Global?
    11 May 2012, 12:08 AM Reply Like
  • Storm Warning
    , contributor
    Comments (156) | Send Message
     
    Only one thing left for you to do after all these failures, Dimon - RESIGN.
    10 May 2012, 05:19 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2542) | Send Message
     
    Dimon got JPM through the crisis very well, they came out larger, stronger, and better set to compete. Why would you want him out?
    10 May 2012, 05:21 PM Reply Like
  • Storm Warning
    , contributor
    Comments (156) | Send Message
     
    This is exactly why.

     

    Jamie Dimon (JPM) Feb. 15 on regulators: "They make trading sound like someone's sitting there, guessing." Today: "Just because we're stupid doesn't mean everyone else was ... We have egg on our faces ... We deserve any criticism we get." [From SA post after this one]

     

    CNBC quoted Dimon as saying "trades were poorly executed and poorly monitored." Poorly monitored?

     

    And "these were egregious, self-inflicted mistakes."

     

    Where are the controls that are supposed to contain this? All of this is Dimon admitting he has failed to do his job.

     

    Who do you hold accountable? The CEO.

     

    It's simple, this is what firing is for.
    10 May 2012, 05:53 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2542) | Send Message
     
    So a trade that leads to a $2 billion loss should result in the CEO being fired, even tho the company has made $36 billion dollars in 2010 and 2011 combined, and $5.4 billion in Q1 of this year?
    10 May 2012, 06:16 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    It shows a lack of risk controls.
    10 May 2012, 06:23 PM Reply Like
  • Ron Reed
    , contributor
    Comments (283) | Send Message
     
    Gosh, if we fire him at $2B loss; seems like we should clone him at a $36B gain huh? And all this without a whole lot of the story being published yet. Just the bare bits and pieces. No offense Storm, but I'd think you are jumping the gun. Than again it is easy to call for someone's head with no consequence.
    10 May 2012, 06:23 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2429) | Send Message
     
    Mike:
    I read a couple of your other comments.
    First let me say congrats on working towards your MBA and your degree in economics. Hopefully you will be someone who uses those degrees to fix the mess we have in this country.

     

    Unfortunately Mike you have only been investing since 2005 and I don't think you have really "learned" yet what really goes on in the world and Wall Street.

     

    JP Morgan is just an arm of the FED. They survived and thrived during the 2007-2009 meltdown thanks to the FED. JPM has over $7 trillion in derivatives exposure, enough to end the world as we know it. They can never fail. They never will. Our government and FED will make sure of that. They will screw over every man, woman and child in the US if they have to, to make sure JPM survives.

     

    They also have one of the most advanced and underhanded prop trading desks in the world. They get away with everything. They can because they are owned by the FED and run our country. Do not let anyone ever tell you different. Just ask all the innocent investors, farmers, etc who's money was stolen from them and given to JPM thanks to the MF Global mess. They are never getting most of that money back. No one in gov't wants to investigate it. They can't.
    JPM makes their money with free money from the FED, stealing, cheating, and lying from others, and they are completed protected.

     

    It is what is it. There is nothing anyone can do about it. Nothing.

     

    Best to you.
    10 May 2012, 06:46 PM Reply Like
  • growsmart
    , contributor
    Comments (165) | Send Message
     
    Don't worry about poor Jamie. He is prepared to run for it. His henchman "JES" Staley has his super yacht "Bequia" registered in the Marshall Islands and is ready to take "El Supremo" to the South Seas.
    10 May 2012, 07:24 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2542) | Send Message
     
    The whole system survived because of the Fed, for better or worse. It still doesnt mean that you should fire the CEO an hour after the disclosure of a loss, given that the firm will still be profitable for the quarter, and the year.
    10 May 2012, 07:44 PM Reply Like
  • W. Walker Jr.
    , contributor
    Comments (271) | Send Message
     
    last year they managed to pay back the gov $250M via antitrust settlements, lol
    10 May 2012, 09:02 PM Reply Like
  • Storm Warning
    , contributor
    Comments (156) | Send Message
     
    Ron, my concern is the same as David's above - no risk controls.

     

    Profits are nice, but gunslinging these days should be held in check.

     

    I understand on the prop desk you take big risks, but this one really blew up and it shows they don't have a good handle on the risks they take everyday. Interesting that this, as I understand it, was supposed to be a hedge that blew up. So much for hedging.

     

    But the big concern is what's the rest of their book look like and how much more of this risk do they have? Who knows, but the risk controls are not that hard to implement.
    10 May 2012, 09:10 PM Reply Like
  • WMARKW
    , contributor
    Comments (10307) | Send Message
     
    He'll be visiting Corzine on weekends in France. Is that where Jon Corzine is?
    11 May 2012, 12:12 AM Reply Like
  • turnbull1
    , contributor
    Comment (1) | Send Message
     
    Wow....I cant believe someone came out and finally said the truth....Tell them the rest of the story.........I just want to know if I should by jpm now and then again if it falls even more......and dont forget about gs.......thanks
    11 May 2012, 10:20 AM Reply Like
  • sec2709
    , contributor
    Comments (6) | Send Message
     
    Excellent! At least someone sees the "big picture" and understands the past, present and future! Put the responsibility and root of the problem where it is!
    11 May 2012, 12:29 PM Reply Like
  • cash
    , contributor
    Comments (447) | Send Message
     
    Round up all those analysts singing praises of JPM and hold their feet to fire. This market seems worse than Russian Roulette.
    10 May 2012, 05:19 PM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    "synthetic credit portfolio".....i donĀ“t know what this is...and I bet many other people do not either...but if your bank has to try to invest in this crap to make money...you really should not be a bank...and you should absolutely not be backed up by the federal Government....if the standard investments of stocks, bonds, treasuries, and consumer loans and accounts is not enough for you to make money....you should not be a bank...period...
    10 May 2012, 05:24 PM Reply Like
  • cash
    , contributor
    Comments (447) | Send Message
     
    Can I get some synthetic credit too? Or better, can I synthesize some credit for myself and wipe out all debt?
    10 May 2012, 05:35 PM Reply Like
  • Ron Reed
    , contributor
    Comments (283) | Send Message
     
    Synthetic credit portfolio is more or less a grouping of CDS (credit default swaps) and other so designed instruments. They are used to get rid of or take on risk of a given debt. Think of it this way, it is an insurance package on a debt, that not only I can buy to cover a debt owed to me, but I can also buy them (or sell them) on debts owed to other people. I routinely compare them to my being able to buy insurance on your house, if your house burns to the ground I get the profit (and you will too assuming you have insurance on your own house). Like any other investment instrument they can be as risky or risk-less as you want to make them. And like all investments more risk = more money.
    10 May 2012, 05:37 PM Reply Like
  • Storm Warning
    , contributor
    Comments (156) | Send Message
     
    This is the stuff Glass-Steagall was intended to prevent, at least at a "bank".
    10 May 2012, 06:25 PM Reply Like
  • UwInvest08
    , contributor
    Comments (6) | Send Message
     
    This is a non-event, who cares? Tax payers will pick up the loss, Dimon will collect his $30m and life will go on.
    10 May 2012, 05:28 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    When you hear the word fortress used so much on the last quarterly conference call you know there is something lurking behind the scenes.
    10 May 2012, 05:38 PM Reply Like
  • Pinocchio1
    , contributor
    Comments (206) | Send Message
     
    Wall St at it's best...
    Again the greed of the clueless financial sector shines through.
    Just remember it's the same guys who rate companies like AAPL and CAT, give expectations, bla bla...
    and it's the same people which will make these 2 stocks drop tomorrow by 1% although it has 0 (zero) real effect, correlation or anything to do with JPM.
    Wall St. and all these analysts have no clue in real economy
    If you ask me how much I'll pay for a bank stock? 0 (zero), I will not own even 1 bank stock, worldwide. Luckily, I don't right now.
    10 May 2012, 05:39 PM Reply Like
  • Ron Reed
    , contributor
    Comments (283) | Send Message
     
    Well, what stocks would you own? I cannot think of a single financial instrument that is not tied by many threads to many other companies and industries. That blanket comment is a little like folks who still say they would not own a foreign made car and get into a new Chevy truck to drive away.
    10 May 2012, 05:42 PM Reply Like
  • Pinocchio1
    , contributor
    Comments (206) | Send Message
     
    AAPL CAT SBUX... to name a few
    10 May 2012, 05:51 PM Reply Like
  • nafar
    , contributor
    Comments (218) | Send Message
     
    Is it correct that JPM would be making US$ 2 bn loss in one segment and wud end up in reduced profit of US$ 4bn in 2nd qtr on company basis?
    10 May 2012, 05:47 PM Reply Like
  • Storm Warning
    , contributor
    Comments (156) | Send Message
     
    This is not why you have a "fortress balance sheet".

     

    This is why you have RISK CONTROLS, and YES, you write them into your trading software!

     

    And that...costs less than 2 Billion!
    10 May 2012, 06:12 PM Reply Like
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    That may force them to close other positions, like their huge short position in Silver. If JP closing their silver short happens at a time when QE3 is about to happen, silver can go anywhere. Will be interesting to see.
    10 May 2012, 06:39 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    Great stuff from zh.

     

    http://bit.ly/HR1svY
    10 May 2012, 06:40 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9933) | Send Message
     
    LOL, JPM now has two huge prop trading desks within JPM according to the article.
    10 May 2012, 08:32 PM Reply Like
  • 2MuchDebt
    , contributor
    Comments (219) | Send Message
     
    According to bbro, all Zerohedge articles are garbage. bbro is the oracle of investing. So don't read any articles; just wait till bbro makes a comment on SA.
    10 May 2012, 09:42 PM Reply Like
  • Stilldazed
    , contributor
    Comments (2115) | Send Message
     
    Hi UI,
    Is that like a SBUX in a SBUX?
    11 May 2012, 04:54 AM Reply Like
  • Ron Myers
    , contributor
    Comments (256) | Send Message
     
    This is all done in the course normal market making activities and you have to accept that this is part of the risks of those activities. JPM would never take one way bets. That would constitute prop trading which is very much illegal.
    10 May 2012, 06:43 PM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    How do people know that these gains from huge positions isn't just market noise?
    10 May 2012, 06:58 PM Reply Like
  • captiankirkoptions
    , contributor
    Comments (195) | Send Message
     
    Surprisingly poor corporate controls - Funny how banks think they better and more sophisticated than everyone else. They have many advantages over everyone else (almost free money from Gov) but shoot themselves in the foot. This sounds like a very foolishly thought out hedge.
    10 May 2012, 07:08 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    Stated elsewhere: This won't bring JPM down because they ARE THE MARKET. That is the problem, with repo, with OTC swaps, etc. Banning the demand that JPM provides is not a solution.
    10 May 2012, 07:48 PM Reply Like
  • Eighthman
    , contributor
    Comments (213) | Send Message
     
    Archman is correct. They are invunerable and above any law enforcement. Ask Andrew McGuire.
    10 May 2012, 08:13 PM Reply Like
  • Hendershott
    , contributor
    Comments (1542) | Send Message
     
    So the prop trading desks were shut down, but the operations moved to the risk management desks, who promptly quit trying to manage risks and began trading to make profits. If you've read the recent bank earnings reports this arrangement isn't unique to JPM. Anyway, M. Dimon probably won't be so smug at Davos this year.
    10 May 2012, 08:30 PM Reply Like
  • mikeinnyc
    , contributor
    Comments (65) | Send Message
     
    Shorted JPM. Class action lawsuits will eat up any profit, SEC Investigations will slow trading to a grind, and worse the banking system just got punched in the eye.

     

    Good luck catching a falling rusty contaminated knife. JPM will be down so much its possible S&P downgrades them if they didn't get downgraded already by Moodys.

     

    New Lows make NEW LOWS! J Livermore.
    10 May 2012, 08:32 PM Reply Like
  • SanDiegoNonSurfer
    , contributor
    Comments (2670) | Send Message
     
    Down 7% AH.
    10 May 2012, 08:40 PM Reply Like
  • darius_joplin
    , contributor
    Comments (15) | Send Message
     
    I look forward to the day that Obama nationalizes the banks.
    10 May 2012, 10:22 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2542) | Send Message
     
    I look forward to the day SA brings back the thumbs down button.
    10 May 2012, 10:27 PM Reply Like
  • W. Walker Jr.
    , contributor
    Comments (271) | Send Message
     
    Good lord, in a sneaky twisted, conspiracy theory way, the Fed Reserve already has..But for the benefit of the private elite wealthy owners.
    10 May 2012, 10:35 PM Reply Like
  • Hendershott
    , contributor
    Comments (1542) | Send Message
     
    Me too. I used to get a lot of those.
    15 May 2012, 07:15 PM Reply Like
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