First there was too-big-to-fail. Now there's too-big-to-manage? JPM's surprise $2.3B trading...

First there was too-big-to-fail. Now there's too-big-to-manage? JPM's surprise $2.3B trading loss is raising questions about whether regulators were asleep at the wheel or are simply not able to keep pace with the complexity of global financial engineering. (regulators scramble on JPM)

Comments (6)
  • davidbdc
    , contributor
    Comments (3194) | Send Message
    Hmmm...... Too big to manage.


    You mean perhaps the federal government is "too big to manage"!!!!


    Break up the big banks AND break up the oppressive government bureaucracy!!!!
    14 May 2012, 03:10 AM Reply Like
    , contributor
    Comments (2) | Send Message
    The Game is coming to an END
    14 May 2012, 03:29 AM Reply Like
  • rg.williams
    , contributor
    Comments (60) | Send Message
    A month ago when this story started to surface, JP Morgan Chase CEO Jamie Dimon called it a "tempest in a teapot." Now he calls the trading strategy employed "sloppy” and “stupid." Which is it? Or, in fact, does CEO Dimon even know what goes on in his "too-big-to-fail" bank?


    Should CEO Dimon be escorted out of JPMC along with his "sloppy” and “stupid" traders and risk-management execs? I'll leave that to the shareholders and board of directors. But, at a minimum, CEO Dimon should resign from the NY Fed if not from JPMC as well.


    As for the regulators, they're the ones who were raising questions about the nature and size of the JPMC derivatives play. Apparently CEO Dimon decided he couldn't stonewall them any longer and now has come clean (sort of).


    One would think after the fiasco of the 2007-2008 financial crisis, the too-big-to-fail (“TBTF”) 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 against limiting the banks' proprietary trading under proposed legislation. (As an aside, the TBTF banks of vintage 2007-2008, including JPMC, are now even bigger than they were at the beginning of the financial crisis.)


    The shareholders, bondholders and managements of these TBTF banks should pay the price for "mistakes" such as JP Morgan Chase's recent fiasco. However, the US taxpayer remains on the hook just as in the 2007-2008 financial crisis.


    Banks have been granted their "franchises" and given preferential treatment to serve the needs of the nation's economy and to facilitate the movement of funds between individuals/entities wanting to have a relatively safe haven for their excess liquidity (aka, depositors) and those needing to borrow those resources. Proprietary trading of the TBTF banks’ "own" funds has little place in this economic environment --- those funds should be distributed to the shareholders who can then choose to invest in riskier asset classes under their own decision regimens. If hedge fund investments are what they want, then let them make conscious decisions to invest in hedge funds, without any Federal (US taxpayer) guarantee of the investment.


    This approach would take much of the burden off US taxpayers to correct the " sloppy” and “stupid" decisions (CEO Dimon’s own adjectives) that have been made by the TBTF banks in the post-Glass-Steagall era.
    14 May 2012, 03:30 AM Reply Like
  • remurraymd
    , contributor
    Comments (2274) | Send Message
    Despite until now having a "risk management" reputation CEOs like Dimon and Pandit are bankers not traders really seem quite clueless
    about trading when your hear them speak as to the ultimate risk of some not all derivatives(CDswaps, also Shorting,Naked Call Selling) which is INFINITY.. Delegation to others due to cluelessness is the root of this type of trouble. We like bankers that are bankers and traders that are traders.APD
    14 May 2012, 06:22 AM Reply Like
  • paulvard
    , contributor
    Comments (127) | Send Message
    Now the media are blaming the regulators. Wall street!!! Grow up!!
    14 May 2012, 07:29 AM Reply Like
  • Poor Texan
    , contributor
    Comments (3527) | Send Message
    re: Too big to manage


    We had a 'conglomerate' fad in this country a couple of decades ago. I think just about all the 'great business empires' have spun off or are trying to exit 'non-core' businesses. JPM's travails highlight the reason.
    14 May 2012, 10:33 AM Reply Like
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