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The knives appear to be out at JPMorgan (JPM) over the blame for its $2.3B trading blunder, with...

The knives appear to be out at JPMorgan (JPM) over the blame for its $2.3B trading blunder, with sources leaking to the WSJ that the disastrous bets were made on the orders of investment chief Ina Drew. The aim was to protect the bank from the eurozone debt crisis and cut investments in the credit markets that had grown too large.
Comments (8)
  • Angel Martin
    , contributor
    Comments (1292) | Send Message
     
    I don't understand this: here is the list of companies covered by IG9, there is very little europe exposure, it's almost all usa
    http://bit.ly/Ja5uwD

     

    so how does selling massive amounts of IG9 fit with a "hedge" position that protects against the eurozone debt crisis?
    13 May 2012, 08:07 AM Reply Like
  • Vet4RonPaul
    , contributor
    Comments (81) | Send Message
     
    I think the wording of "The aim was to protect the bank ..." is far too generous. I would have phrased it as "The aim was to maximize profits and the real issue is that JPM losses have and will continue to be socialized while their profits are private.". I care not a hoot how much money JPM or anyone makes or looses as long as I don't have to cover their losses. This is like watching the winners in AC and Vegas give me nothing but fully expect me to cover their losses. Our government policy is immoral in this regard and the pattern of huge losses absolutely will not change until this basic position is changed. Why would anyone not bet long if someone else covers the losses?! With every government bailout, easing and twist we move further away from capitalism and more to socialism. Romney, Obama, Hollande - all essentially socialists and soon we will be French.
    13 May 2012, 09:19 AM Reply Like
  • Aristiphones
    , contributor
    Comments (1327) | Send Message
     
    still doesn't answer the question "why was the risk division the one taking all the risk"? Obviously "that's Jamie Dimon's department" as well. That is why it was taking all the risk was it not? On Jamie Dimon's orders?
    13 May 2012, 11:22 AM Reply Like
  • remurraymd
    , contributor
    Comments (2287) | Send Message
     
    Jamie Dimon will ultimately have to shoulder the blame.His sworn testimony on the hill in 2008 before the senate about Bear Stearns taking "excessive risk" on CD swaps and failing will torpedo him eventually.He took Bear over for a song and within a few years did EXACTLY the same CD hedge swaps on JPM book that Failed Bear.Big Bank/Brokers could get broken up over this.APD
    13 May 2012, 01:51 PM Reply Like
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    That was just a prop trade. The ''it was a hedge'' talk is for trusting fools.
    13 May 2012, 03:39 PM Reply Like
  • Jeremy Johnson, CFA
    , contributor
    Comments (778) | Send Message
     
    You have a $300 billion book of securities and you lose $2 billion -- it is less than 1%. How much income has the portfolio generated over the past year? How much capital appreciation? This is one segment of the portfolio it should be viewed in the context of the whole.
    13 May 2012, 04:16 PM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    Agreed, it ain't gonna kill them.

     

    The real story is that if someone knows your position, they are going to crush you with it. Now everyone knows JPM is in an untenable situation.

     

    Dimon coming public about this must mean something but things are definitely not as they appear.
    14 May 2012, 10:15 AM Reply Like
  • Leftfield
    , contributor
    Comments (3758) | Send Message
     
    "You have a $300 billion book of securities and you lose $2 billion -- it is less than 1%."

     

    When people who have a history of ripping you off to cover their losses tell you some small portion of the picture of their complicated finances to sooth you, you need to obey your natural reflex which is to hold onto your wallet. If we listen to their assertions that this time all is well, we will only find out the dismal truth of the unbacked leveraged bets that are proliferating more than ever when Wall Street comes demanding even larger bailouts than last time.

     

    A 1% reduction in capital is a major portion of the several percent banks are required to have under the "stress tests" that are undoubtedly utterly rife with favorable assumptions about compliance of the financial WMD's designed and held by these TBTF banks.
    14 May 2012, 12:36 AM Reply Like
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