JPMorgan May Lose $5 Billion on Derivatives, WSJ Reports!
[youtube=http://www.youtube.com/watch?v=hQJUCEqstnU]
“This collapse of JP Morgan Chase actually could trigger a detonation of the entire derivatives bubble!” – Diane Sare, 2:38 onwards
- Jim Willie thinks the loss is closer to US$18 B!
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JPMorgan May Lose $5 Billion on Derivatives, WSJ Reports!
By Bloomberg News
JPMorgan Chase & Co. (JPM) (JPM)’s loss from derivatives trading may widen to $5 billion, the Wall Street Journal reported.
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Chief Executive Officer Jamie Dimon personally approved the strategy that led to the trades, without monitoring how they were executed, the newspaper said, citing people familiar with the matter that it didn’t identify. His failure to closely regulate that activity caused resentment among executives whose departments face tighter oversight, according to the Journal.
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JPMorgan last week announced a $2 billion trading loss on synthetic credit products, or derivatives tied to credit performance. Dimon said the transactions, intended to manage risk, were “egregious” failures by the bank’s chief investment office. JPMorgan has said the amount could increase by $1 billion or more as it winds down the positions.
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Joseph Evangelisti, a spokesman for New York-based JPMorgan, declined to comment on the $5 billion estimate. JPMorgan fell 0.5 percent to $33.77 by 10 a.m. in German trading, after closing at $33.93 in New York yesterday, down 4.3 percent.
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The largest U.S. lender by assets didn’t have a treasurer during the five months when the trades took place, the Journal reported in a separate article. JPMorgan’s chief investment office oversees about $360 billion, or the difference between deposits and what the bank lends. Matt Zames, who was appointed to lead the division after the loss was reported, shook up leadership and announced a“renewed focus” on hedging risks.
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