JP Morgan Unit Has $100Bn of Risky Bonds!

• US$100B exposure in risky bonds may appear large. But compared with their financial derivatives exposure of between US$70-100T, it is small change!
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  JP Morgan unit has $100bn of risky bonds: report! 
  by http://www.businessspectator.com.au/ 
  JP Morgan Chase’s chief investment office (CIO), the unit at the centre of a $US2 billion (A$1.98 billion) trading loss scandal, has built up holdings of more than $US100 billion in asset-backed securities and structured products, the risky bonds that were at the centre of the global financial crisis in 2008, according to a report in the Financial Times.
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  A number of traders and credit experts reportedly told the Financial Times that the CIO has been the biggest buyer of European mortgage-backed bonds and other complex debt securities for the past three years.
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  “I can’t see how they could unwind these positions because no one can replace them in terms of size. It’s a bit of the same problem they face with the derivatives trade,” said a credit trader at a rival bank. “They pretty much are the market.”
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  In 2009, in a bid to increase returns and diversify investments, the unit moved away from traditional vanilla assets and began building up a large portfolio of risky products.

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