Let’s not let this little tidbit go unremembered today. Remember when Jamie Dimon came out and said that his firm’s little escapade in London cost them $2 billion? Multiply by four and a half:
Losses on JPMorgan Chase’s bungled trade could total as much as $9 billion, far exceeding earlier public estimates, according to people who have been briefed on the situation.
When Jamie Dimon, the bank’s chief executive, announced in May that the bank had lost $2 billion in a bet on credit derivatives, he estimated that losses could double within the next few quarters. But the red ink has been mounting in recent weeks, as the bank has been unwinding its positions, according to interviews with current and former traders and executives at the bank who asked not to be named because of investigations into the bank.
The bank’s exit from its money-losing trade is happening faster than many expected. JPMorgan previously said it hoped to clear its position by early next year; now it is already out of more than half of the trade and may be completely free this year.
According to their internal models, the losses could “only” go as high as $6-7 billion, but the high end of the range is $8-9 billion. Now I could see how the PR strategy would be to leak a high number and back into the lower (but still awful) one, and taking that as a “win” in the markets. But I’m taking the over. It looks like JPMorgan Chase is mismanaging this trade on the way out as badly as they did on the way in. By extricating themselves so quickly, they are taking on more losses. The Financial Times said a week ago that they were 70% out of the trade, and that meets with this analysis.
The firm will probably spread out this loss over several quarters so we won’t ever know the precise extent of it. JPMorgan will probably end up profitable in second-quarter earnings, which will come out July 13. But this will certainly feed the speculation that JPMorgan has a massive hedge fund inside their own bank, one whose positions they cannot control when they take on massive risk. And it magnifies the potential problem if a weaker megabank found itself in the same position. Part of the reason for the accelerated losses is a pile-on from JPM’s competitors. Given the dog-eat-dog nature of Wall Street, you can certainly expect that posture in a parallel circumstance. And that could easily take down a big bank if the trade was exposed enough. And don’t even get me started about the risk of a euro collapse.
Fortunately, we have strong oversight capabilities at, say, the Senate Banking Committee, and I’m sure they’ll haul Jamie Dimon in again to testify and just… never mind.




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No one could have anticipated….
I wonder what JPMC efforts are in place to ensure this loss doesn’t go to ten billion. An eleven-digit loss does sound much worse than a ten digit loss. Right? Doesn’t it?
If it gets any worse, Jamie might have to hock those presidential seal cufflinks.
Damn, you beat me to it.
I’m going to go check eBay now. They would make a nice present.
They have to bring the ineffective portion of the “hedging trade” into the income statement this quarter, they can’t spread it out. Even the portion that is considered an effective hedge will still be reported in the Equity statement as an unrealized loss. Either way we should have an accurate estimate of the loss on this trade this quarter.
So…….. should the President appoint Jamie to Treasury or to head the Fed?
ONLY $9Billion??? Why we’re not even into double digits.
Phew! Had me worried there for a moment. No sweat. What’s a few $Billion to the .0001%, who get bailed out endlessly by the 99%?
$UCKAH$!!!! bwahahahahahahahahahahahaaaaaaaaa
Maybe Zero can appoint Jaime to be Bob Cratchett??? It would be a change from playing the role of Mr. Burns.
$6-7 Billion dollars? That’s nothing… That’s somewhere in the vicinity of the aggregate dollar amount America will blow out car’s tailpipes, in one week, going back and forth to work using, gasoline. I wonder how much healthcare services, one week of this squandered/wasted economic value/potential energy would provide for Americans?
Then again I wonder what a nominal Wall Street Transaction Tax would provide for America, to pay for healthcare?
Nice Job Mr. J.D. losing 2, 6, 7, 9, $$$Billions Dollars, that is! To bad you don’t feel the pain, as Americans do wasting 6-7 billion dollars, 52 times in a year going to work?
I promise it will end up being near $20 billion. I’ve said it since day 1, when the little Fail Whale was just the London Whale.
Keep in mind that JPM’s internal stress tests show that a loss of only $51 Billion would bring down the bank.
In that context $6-7 billion is a pretty big deal.
Think Darrel Issa might be asked to consider ‘contempt of Congress’ charges against Mr. Dimon? Did he, or did he not, lie to Congress?
What you’re suggesting is Dimon be held in contempt for lying to his children.
Pfft.
We all lie to our kids.
Change of basis?
and counting…
And the canceled $15 billion stock buy back? Share holders should be really pissed!!!!
lose twenty billion, and still have your ass kissed by the Leaders of the USA?
SAVVY !!!!
thank you. Where do we look, in the 10-Q for second quarter? That would be filed when, mid-August?
According to Matt Taibi and Yves Smith on the Bill Moyers & Company program, JPM Chase actually receives $14 Billion in taxpayer subsidy funds each year.