Seeking Alpha

It's open season on the trading positions at JPMorgan's (JPM) Chief Investment Office, and the...

It's open season on the trading positions at JPMorgan's (JPM) Chief Investment Office, and the $2B loss disclosed 4 days ago has grown to $3B, according to sources. Markets will fluctuate and today's loss could be tomorrow's gain, but this is a bank - holding government-insured deposits and with access to near-free capital from the Fed - not a hedge fund.
From other sites
Comments (28)
  • rjj1960
    , contributor
    Comments (1370) | Send Message
     
    Wall street has destroyed main street. Throw the banks in there as well. We need George Bailey at the controls.
    16 May 2012, 10:12 PM Reply Like
  • klarsolo
    , contributor
    Comments (706) | Send Message
     
    George Bailey employed his Uncle Billy (nepotism) in an important position of the bank, and Billy promptly lost enough money to sink the whole institution. How is that much better compared to JPM and their London office which lost $ 2 billion?
    16 May 2012, 10:19 PM Reply Like
  • deercreekvols
    , contributor
    Comments (5714) | Send Message
     
    Revisionist history- Mr. Potter stole the money from Uncle Billy. Uncle Billy did not lose the money. Bailey Building and Loan investors and community members gathered enough money to cover the theft.

     

    JPM investors aren't in line to cover the $2B, no make that $3B loss. Nobody is throwing money into a basket to help JPM.
    16 May 2012, 10:42 PM Reply Like
  • klarsolo
    , contributor
    Comments (706) | Send Message
     
    Uncle Billy essentially gave the money to Mr. Potter, who probably considered it a gift among friends. Nothing wrong with that.
    16 May 2012, 10:45 PM Reply Like
  • Tack
    , contributor
    Comments (13562) | Send Message
     
    deer:

     

    In "Wonderful Life," the folks to whom George Bailey gave mortgages passed the hat around and collected money to save the bank.

     

    In today's world, the mortgagers don't even pay their mortgages, much less passing any hats.
    16 May 2012, 11:05 PM Reply Like
  • klarsolo
    , contributor
    Comments (706) | Send Message
     
    They do pass their hats around, to collect more handouts
    16 May 2012, 11:15 PM Reply Like
  • SanDiegoNonSurfer
    , contributor
    Comments (2826) | Send Message
     
    Handouts are for the rich, klarsolo. Everyone else gets what trickles down.
    16 May 2012, 11:32 PM Reply Like
  • SteveWa
    , contributor
    Comments (82) | Send Message
     
    Uncle Billy was a fool who didn't guard the cash well enough while it was outside of his safe. A fool and his money are soon parted.
    17 May 2012, 09:19 AM Reply Like
  • deercreekvols
    , contributor
    Comments (5714) | Send Message
     
    "A fool and his money are soon parted."

     

    The new slogan for JPM.

     

    Have a good day everyone.
    17 May 2012, 11:08 AM Reply Like
  • SteveWa
    , contributor
    Comments (82) | Send Message
     
    JPM = "Just Pay Me"
    17 May 2012, 02:44 PM Reply Like
  • klarsolo
    , contributor
    Comments (706) | Send Message
     
    A bank is essentially a levered portfolio of more or less risky assets. You could call it a hedge fund if you wanted.
    16 May 2012, 10:14 PM Reply Like
  • SanDiegoNonSurfer
    , contributor
    Comments (2826) | Send Message
     
    I think this whole thing is overblown, actually. The loss was stupid and shareholders should be p.o.'ed but JPM can easily cover it from earnings. It's not as if taxpayers are even remotely expected to bail out JPM over this.
    16 May 2012, 10:27 PM Reply Like
  • Storm Warning
    , contributor
    Comments (156) | Send Message
     
    No, taxpayers are not even remotely expected to bail out JPM...yet.

     

    That would never happen in...oh, wait...
    16 May 2012, 10:47 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Exactly. And if the conclusion is that they're not managing risk effectively, all the hue and cry about public money can be addressed by either jacking up their deposit insurance premiums or refuse to offer that insurance. It's way past time the FDIC started acting like an insurance company. It absolutely is not JPMC's fault that the government is full of idiots who insure anyone who wants it at unrealistically low premiums and then hands these same clowns trillions of dollars in free money when they blow it. It's their fault for losing a bunch of their shareholders' money, and they all deserve to lose their jobs for that. But people need to reserve their self-righteous indignation for the kleptocrats who make JPM shareholders' problem into everyone else's problem. If I were running a for-profit insurance company and one of my customers demonstrated this kind of incompetence, I'd non-renew their policy and fire the guy who underwrote it in the first place. What's so difficult about accepting that as the right course of action here?
    17 May 2012, 12:36 AM Reply Like
  • mimailmula
    , contributor
    Comments (44) | Send Message
     
    Even for a bank that size, loosing 1 billion in 4 days because credit default swaps changed in value is just crazy. Moreover nothing has really happened during these 4 days other than minor correction in the markets. How big is that position? How big would be the losses on a real euro breakdown?

     

    They are way far from doing their core business and risking failure that could eventually fall on us tax payers. This can't go on, we need major changes in bank regulations to keep these monkeys out of these markets.
    16 May 2012, 10:39 PM Reply Like
  • DrData02
    , contributor
    Comments (31) | Send Message
     
    Jail.
    16 May 2012, 11:04 PM Reply Like
  • Paul Price
    , contributor
    Comments (1508) | Send Message
     
    At 40:1 leverage a 2.5% loss wipes out 100% of your equity.

     

    Get FDIC insured banks out of the speculation business.
    16 May 2012, 11:18 PM Reply Like
  • WMARKW
    , contributor
    Comments (10454) | Send Message
     
    There you go Paul....and those "near free capital" funds are available, but not as invested capital. So loss after loss wipes out capital and wrecks ratios that are meaningful to ratings agencies.

     

    But all in all.....it couldn't happen to a nicer bunch of guys.
    17 May 2012, 12:35 AM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Charge them premiums that reflect their risk and then see if they're willing to pay. It's not up to the insurance company how fast you drive; it's up to you to decide whether you're willing to pay for it. The core problem we have is that the government and central bankers are desperate to artificially decrease the cost of borrowing by any means necessary. Including undercharging for the deposit insurance that the government has created a monopoly on ... by undercharging for it. Fix that and we can all stop caring whether JPM is levered 40x or 400000000x. It's not up to me to tell them how to run their bank; I'm not a shareholder and it's not my problem. Just make the government stop giving them handouts and let them implode like the incompetent pieces of human filth that they are. My bet? Take away the handouts and you'll get your deleveraging. Trying to regulate your way to sensible risk management while guaranteeing everything they do for a couple of basis points is a losing battle. You couldn't do it if every man, woman, and child in America were trained for 10 years as bank regulators and tasked with nothing else.
    17 May 2012, 12:37 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2610) | Send Message
     
    That's assuming that JPM is leveraged at 40:1, and that the value of all the assets its holding drop 2.5%. Depositholders are not at risk.
    17 May 2012, 12:52 AM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    So are banks reporting accurately how leveraged they are?
    17 May 2012, 01:45 AM Reply Like
  • medzjohn
    , contributor
    Comments (265) | Send Message
     
    JPM is the poster child for Glass-Stegal reenactment.
    17 May 2012, 12:58 AM Reply Like
  • P. Dennis
    , contributor
    Comments (376) | Send Message
     
    Has Jamie Dimon indicated remorse for leading the effort to water down appropriate regulations yet? If he hasn't, what can we conclude?
    17 May 2012, 01:42 AM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    Isn't risk management at JPM bank fundamentally flawed since the "Risk Manager" reports to the guy (the CEO) who is supposed to maximize return?
    17 May 2012, 01:53 AM Reply Like
  • Pinocchio1
    , contributor
    Comments (206) | Send Message
     
    Megalomanic clueless bankers that are convinced that they smart.
    Time to do away with all options, shorts... derivatives shmarivatives.
    If you want to invest, invest. If you don't like something invest elsewhere.
    The whole nation slept better at night, and got more out of their investments before these financial parasites took over
    17 May 2012, 03:10 AM Reply Like
  • deercreekvols
    , contributor
    Comments (5714) | Send Message
     
    CBS radio reported this morning that JPM is still holding the derivatives, thus the increase loss from $2B to $3B, as is being reported. Jill Slesinger said that the loss could be greater than it is now, or it could decrease depending on when JPM gets out of this mess.

     

    So- they disclose a loss and fail to say that they are still in the game that caused the loss.

     

    Firing a few employees caused enough smoke to cover the facts for a few days. What does JPM do now?

     

    Where is Jon Corzine?
    Where is George Bailey?
    17 May 2012, 07:32 AM Reply Like
  • winningtrader
    , contributor
    Comments (2476) | Send Message
     
    Has the loss gone to $3 billion or to 4-5 billion? They are in a tight spot if they haven't managed to get out already.
    17 May 2012, 09:04 AM Reply Like
  • P. Dennis
    , contributor
    Comments (376) | Send Message
     
    WFC
    17 May 2012, 09:05 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector