In a special conference call this evening Jamie Dimon, CEO of JPMorgan disclosed a "trading loss" of at least $2 billion from a failed hedging
The strategy "morphed
over time" and it was
"ineffective, poorly monitored,
poorly constructed and
all of that," said Dimon.
Last month, he denied there were any problems,
most likely hoping they would
go away or he could cover them
up. Instead, Dimon went to the confessional.
Bloomberg has additional details
in JPMorgan has trading loss of at least $2 billion, reputation
The April Wall Street Journal report said a trader in JPMorgan's Chief Investment Office, nicknamed the 'London Whale' had amassed an outsized position that had caused hedge
funds to bet against his position. In the bank's earnings conference call in April, Dimon
called the concern
"a complete tempest
in a teapot."
Regulators and lawmakers
are now likely to push Dimon for more details about
the trades. Those details will guide how regulators now view the issue and its impact
on the Volcker rule, said Karen Petrou, managing partner of Washington-based Federal Financial Analytics.
the Volcker Rule
Interestingly, Dimon says this should
not be an excuse to implement
the Volcker Rule (a ban
on proprietary trading).
The problem, he said, was with
the execution of the hedging
That's his opinion. Here's mine.
I believe banks should be banks
and not hedge funds. I believe "too big to fail" means too big
period. And finally I believe this should cost Dimon
and the entire board their jobs.
That said, if we would just end fractional reserve lending and the mammoth leverage it allows
(and end FDIC insurance right along
with it), we would not be discussing this kind of monumental greed coupled with monumental stupidity in
the first place.