JPMorgan Loses $2 Billion on Unit’s ‘Egregious Mistakes’
JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon said the firm suffered a $2 billion trading loss after an “egregious” failure in a unit managing risks, jeopardizing Wall Street banks’ efforts to loosen a federal ban on bets with their own money.
The firm’s chief investment office, run by Ina Drew, 55, took flawed positions on synthetic credit securities that remain volatile and may cost an additional $1 billion this quarter or next, Dimon told analysts yesterday. Losses mounted as JPMorgan tried to mitigate transactions designed to hedge credit exposure.
The firm’s chief investment office, run by Ina Drew, 55, took flawed positions on synthetic credit securities that remain volatile and may cost an additional $1 billion this quarter or next, Dimon told analysts yesterday. Losses mounted as JPMorgan tried to mitigate transactions designed to hedge credit exposure.
A "synthetic credit security" is a fancy word meaning a credit default swap on a credit default swap, which is "synthetic" because there is no hard asset pledged as security. This is just Wall Street shaking paper money back and forth as hard as they can and hoping it will magically grow. Outside analysts are suggesting total losses could near $200 billion. JP Morgan, as one of the "too big to jail", will likely demand a taxpayer bailout.
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