JP Morgan, Jamie Dimon and Your Money

The flood of articles on the $2 billion +++ loss through risky hedge bets, and hedge bets on hedge bets just keeps coming.  Here are a few of them , newest at the top. [And they will keep coming.  What matters, of course, is what is finally DONE, not just said.]

FBI Investigating JPMorgan  5/15

Red Flags Go Unheeded by Bosses at JPMorgan  Jessica Sliver-Greenberg 5/14

Make Banking Boring, Joe Nocera, 5/14

We know that JPMorgan, awash in taxpayer-insured deposits, took some of that money — around $62 billion at last count — and decided to invest it in corporate debt, which had the potential to generate higher returns than, say, old-fashioned loans.

Why We Regulate, Paul Krugman, 5/13

…banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on

At JPMorgan, The Ghost of Dinner Parties Past, Gretchen Morgenson, 5/12

WHAT goes around comes around. Sometimes it happens sooner than you’d think.

That round wheel turned on JPMorgan Chase last week, which disclosed that it had suffered a $2 billion trading loss in credit derivatives. That such a hit had befallen the mightiest of banks was perhaps more stunning than the size of the loss.

So where does the karma come in? The loss, and the embarrassment it held for Jamie Dimon, the bank’s imperious chief executive, came just one month after a private dinner party in Dallas at which he assailed two respected public figures who have pushed for policies that would make banks like JPMorgan smaller and less risky.

 JPMorgan Chase’s $2Billion Loss , NY Times Editorial, 5/11

 …the loss also occurred because of a continued lack, nearly four years after the crisis, of rules and regulators up to the task of protecting taxpayers and the economy from the excesses of too big to fail banks; and, yes, of protecting the banks from their executives’ and traders’ destructive risk-taking

When Will They Learn, Joe Nocera, 5/11

For much of the last three years, as the Obama administration and Congress have grappled with how to rein in a financial system that had lost both its moorings and its ethical compass, no one has been more vocal in his opposition to a more regulated banking system than Dimon. He has complained repeatedly about higher capital requirements. He has said that some proposed regulations were “anti-American.” He has consistently flayed the Dodd-Frank financial reform legislation, which was ultimately Congress’s attempt to prevent another Lehman Brothers-style meltdown.

The Bet The Blew Up for JPMorgan Chase — Peter Eavis 5/11

When will Wall Street stop springing these types of nasty surprises?

Every big bank has risk controls. Teams of executives are assigned to manage and review trades to ensure the bank’s safety and health.

Yet trading debacles happen with surprising regularity.

Last year, losses at two big institutions rocked the financial world. MF Global went out of business after making an ill-timed bet on European debt. Before that, a UBStrader in London lost the firm $2.3 billion. The 2008 financial crisis was the result of major risk miscalculations that brought down several big financial institutions, including Bear StearnsLehman Brothers and the American International Group.

Now, JPMorgan Chase faces its own mess.

A Shock from JPMorgan Is New Fodder for Reformers, Nelson D Schwartz

“The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making,” said Senator Carl Levin, a Michigan Democrat who co-wrote the language at the heart of the battle between the financial and government worlds, in a statement. “Today’s announcement is a stark reminder of the need for regulators to establish tough, effective standards.”

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