JPMorgan keeps losing tons on bad bets:
JPMorgan Chase, which reported its second-quarter results on Friday, disclosed that the losses on a soured credit bet could mount to more than $7 billion, as the nation’s largest bank indicated that traders may have intentionally tried to conceal the extent of the red ink on the disastrous position.
Amid a swirl of questions about how the traders marked their bets, JPMorgan also said Friday that it would be forced to restate its first-quarter results.
If the trades, made out of the powerful chief investment office unit in London, had been properly valued, the bank said it would have lost $1.4 billion on the position in the first quarter.
Jamie Dimon, the bank’s chief executive who has consistently reassured investors that the losses would be contained, announced that the bank lost $4.4 billion on the botched trade in the second quarter. So far this year, the bank says it has lost $5.8 billion on the trades in credit derivatives.
In a statement, JPMorgan said that “the firm has recently discovered information that raises questions about the integrity of the trader marks and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter.”
But remember, we don’t need no stinking regulation.
General Stuck
None of this matters cuz Obama is a liar, and now The Pin-okeo Kid. Desperado and blackety black.
Mitt ought to make JP Morgan an ad and explain it in Land Shark. Then right wing bloggers can give us the full skinny. It’s all part in the screenplay, or a liberal typo.
JoeShabadoo
One word from the article says it all: bets.
Most of the investment world is simply legalized gambling.
Brachiator
Shine on, you crazy Dimon.
scav
mmm, still more things hidden behind curtains that we’re not supposed to look behind. Penn State, Barclays, JPM and what’s that other big hanging curtain that we’re supposed to sit back and admire but not peek under or behind as none of our beeswax and entirely not relevant?
Just playing with and vastly amused by a developing theme.
Butch
So I s’pose we’re supposed to turn on the free money spigot and bail these folks out again?
daveNYC
He’s going to have to step down. It’s one thing to lose money, it’s a totally different thing if your controls are loose enough to let your traders hide that they’re loosing money.
Judas Escargot, Acerbic Prophet of the Mighty Potato God
@scav:
Don’t forget the rest of the theme: Obvious complicity from the self-appointed “fact-checkers” and “guardians”.
TenguPhule
This is shorthand for “We lied and got caught, but its not our fault.”
I expect to see a lot more of this in the days to come.
kindness
I wouldn’t care if they make crazy and/or bad bets except that they could work it so that the FDIC covers their bad bets. Well that and Chase is my checking account. I have a Credit Union where my ‘savings’ (as meager as it is) is parked but Chase bought out Washington Mutual and so I’m there. Guess I just seem to be linked to fraudsters and snake oil salesmen as far as my checking accounts go. Still, I like both WaMu and Chase way better than Wells Fargo or BofA so…such is life.
Spaghetti Lee
Would anyone else on the planet get away with this? “I just lost 7 billion dollars, whoopsie daisie!” And rest assured that some media source will soon refer to him as “Financial expert Jamie Dimon.”
Mino
Surprise, surprise–cheaters and liars find their employees are cheaters and liars, also.
Do you think the House will have him back to see how thay can help?
aimai
@Brachiator:
I LOL’d. That was brilliant.
aimai
scav
@Judas Escargot, Acerbic Prophet of the Mighty Potato God: I almost missed those little developing grace notes, yes, thank you.
Between their crawling further and further out on limbs and sawing bits of the tree off behind them, it is a bit grossly edifying to watch the tree succumbing to termites and untreated pine beetles. That shiny trust-me-I’m-a-CEO three-piece is not wearing well and may end up in the closet next to the gov-pinstripe. Olympic Organizer spandex and magic panties, which will he go with next . . . .
Gutless Drunk
Our new financial paradigm – Steal and Settle = Profit
In the last two years:
July 12, 2012,
No 1. home lender Wells Fargo & Co. has agreed to pay at least $175 million to settle federal allegations
http://www.latimes.com/business/money/fi-mo-wells-bias-20120712,0,4185138.story
April 11, 2012
Wells Fargo Hit With $3.1 Million Fine In Mortgage Servicing Mess
http://njtoday.net/2012/04/11/wells-fargo-hit-with-3-1-million-fine-in-mortgage-servicing-mess
Tue Apr 5, 2011
The Securities and Exchange Commission said that Wells Fargo Securities will pay $11 million in disgorgement and penalties to settle
http://www.reuters.com/article/2011/04/05/us-sec-wachovia-idUSTRE73466O20110405
02/ 6/2012
JP Morgan Chase To Pay $110 Million To Settle Accusations Of Excessive Overdraft Fees
http://www.huffingtonpost.com/2012/02/06/jpmorgan-settles-overdraf_n_1258072.html
Tue Jun 5, 2012
JP Morgan Chase & Co received court permission to pay as much as $44.6 million to resolve private litigation
http://www.reuters.com/article/2012/06/05/jpmorgan-bidrigging-settlement-idUSL1E8H52XA20120605
March 12, 2012
Government formally files $25-billion foreclosure settlement between the government officials and the five largest mortgage servicers: Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.
http://articles.latimes.com/print/2012/mar/12/business/la-fi-mo-foreclosure-settlement-20120312
November 7, 2011
Bank of America To Pay $410 Million To Settle Overdraft Fee Lawsuit
http://miami.cbslocal.com/2011/11/07/bank-of-america-to-pay-410m-to-settle-overdraft-fee-lawsuit/
08/28/11
Bank Of America Reaches $8.5 Billion Settlement On Mortgage-Securities Claims
http://www.huffingtonpost.com/2011/06/28/bank-of-america-nears-85b-mortgage-settlement_n_886412.html
February 15, 2012
Citi admits mortgage fraud in $158-million settlement
http://www.latimes.com/business/money/la-fi-mo-citi-settlement-20120215,0,1477531.story
10/19/2011
Citi Settles SEC Charges, Will Pay $285 Million
http://www.forbes.com/sites/steveschaefer/2011/10/19/citi-settles-with-sec-285-million-for-misleading-investors-in-housing-cdo/
May 31, 2012
SunTrust Mortgage Inc., the mortgage lending subsidiary of the nation’s 11th-largest commercial bank, has agreed to pay $21 million to resolve a lawsuit
http://www.justice.gov/opa/pr/2012/May/12-crt-695.html
July 15, 2010
Goldman Sachs to Pay Record $550 Million to Settle SEC Charges Related to Subprime Mortgage CDO
http://www.sec.gov/news/press/2010/2010-123.htm
July 6, 2012
British bank Barclays was slapped with $450 million in fines and penalties for manipulating information used to set a critical interest rate.
http://www.propublica.org/article/beyond-barclays-laying-out-the-libor-investigations
DECEMBER 7, 2010
Bank of America entities have agreed to pay a total of $137.3 million in restitution federal and state agencies for its participation in a conspiracy to rig bids in the municipal bond derivatives market
http://www.justice.gov/atr/public/press_releases/2010/264827.htm
Wachovia Bank N.A., which is now known as Wells Fargo Bank N.A., has entered into an agreement with the Department of Justice to resolve the company’s role in anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $148 million in restitution,
http://www.justice.gov/atr/public/press_releases/2011/278076.htm
JPMorgan Chase & Co. has entered into an agreement with the Department of Justice to resolve the company’s role in anticompetitive activity in the municipal bond investments market and has agreed to pay a total of $228 million in restitution
http://www.justice.gov/atr/public/press_releases/2011/272815.htm
July 13, 2012
The bungling bankers at JPMorgan Chase actually lost $4.4 billion with their freewheeling trades
http://www.nydailynews.com/news/national/jpmorgan-chase-trading-loss-grew-4-4-billion-original-estimate-2-billion-article-1.1113634#ixzz20W4DjHrw
Mowgli
@kindness:
Uh, hello…? Move your money. What, do these guys have you in some sort of Vulcan mind grip? Go Credit Union!! Otherwise you, like millions of others, are complicit in this “too big to fail” nonsense.
@Brachiator:
Agreed with aimai– brilliant!
GxB
@Brachiator: Ding!
Any bets on his bonus NOT going up anyway?… Anyone…? Bueller?
Maude
THe amount of the losses keep changing. THere’s more to the story.
I heard part of the Dimon conference this morning. He was fast talking, had speech hesitations and didn’t sound confident.
He used the word asymmetrical. That’s what caused the losses in the first place.
I bet that JPMC is still doing the same type of “trading” that caused the losses, only under a different department and calling it something else.
Jump!
Maude
@kindness:
FDIC only covers commercial bank accounts. This is the investment bank side. Your money isn’t involved in this.
Mino
@Maude: Shhhh.
RaflW
@daveNYC:
HaHaHAHAHAhaHaha.
Controls!?
Hahhahahaahha
There are no controls. The whole point of this klown kar of banksterism is uncontrolled gambling and theft. The. Whole. Point.
This is why LIBOR matters, not that most American business reporters get it. If the Mafia did what the banks did, they’d e be up o RICOH charges. But since the banks own the police (the Mafia has tried that, and it worked for periods of time), the courts, the lawyers and the politicians – and more than a few reporters – we’ll get nuttin’ over here.
I think I might really have to emigrate from this lawless backwater we’re becoming.
trex
@Brachiator:
Nice.
MikeJ
@RaflW:
They’d be photocopied?
daveNYC
@RaflW: Gambling and theft of the customer’s cash? Sure. It’s a dirty industry and it needs to be regulated to within an inch of its life. But from the business and shareholder perspective, you need internal controls so that you can make sure that it’s the customers who are getting screwed. Those controls failed here, and Dimon will probably have to go. With only he comfort of his multi-million dollar severance to keep him warm through the night.
Roger Moore
@TenguPhule:
More like, “nobody was willing to ask too many questions until the cash started flowing out instead of in”.
Culture of Truth
@MikeJ: Those Ricola charges are even worse.
Haydnseek
Idea for a new jobs bill: Now hiring tumbrel builders and Guillotine sharpeners. These are long term positions. No resume necessary, just show up with own tools and willingness to work long hours. EOE.
rikyrah
but, no, they don’t need any regulations…
uh huh
hitchhiker
Oy, am I a bad person to remember this from last fall?
I hope the cocktail sippers there to honor Mr. Dimon all lost a boatload of cash; at least they won’t be able to give it to Karl.
Haydnseek
@Brachiator: Excellent! Syd Barrett could do a better job, and though he’s no longer with us, I continue to wish he was here. (Now putting on fireproof suit, and not because of comment flames.}
yeah news!
@Gutless Drunk: impressive list. How did you compile it?
gene108
@scav:
The Barclays LIBOR fixing scandal is a bigger issue, though it gets very little airtime in the U.S., outside of watching CNBC or Bloomberg at 4 or 5 am (EDT), when they have their international correspondents talking about it.
I do wonder, if any U.S. firms will be caught up in the investigation and if any U.S. agency will have the guts to actually conduct an investigation like the Brits are doing; I’m not holding my breath waiting for that to happen though.
The JPMC deal is just another bad business deal. The real scary part is this sort of thing can be done with investors money (MFGloba, for example), rather than JPMC capital. If there’s no chance investors money would be used in deals like this, then you just chalk it up to a bad business deal, without broader ramifications.
GxB
Well shut my mouth. No direct mention that Dimon is one of the clawed, and I’m sure it’s little more than a slap on the wrist. But there’s blood in the water.
Enhanced Voting Techniques
@daveNYC:
Must it come to such a theater of cruelty? I mean the man is a victim here too! Just like Romney, just because you are the CEO of company means you can be bothered with what is is up.
ericblair
@gene108:
Yeah, but as DaveNYC was saying, it wasn’t “we knew the risks and the impact, all the relevant directors and risk management signed off, deal went bad, shit happens, here’s the impact.” It was “um, we lost multiple billions of dollars because some trader just up and did a trade, we don’t really know how much, and we don’t know what it means to the rest of our business. But we’re a cornerstone of the US banking system so everyone can trust us!”
Balconesfault
Step right up!
You can’t win, if you don’t play!
johnny ontonagon
@Butch:
I think that’s what they think will happen, or rather they are betting it will. Too big to fail without a major economic impact, and between now and November they’re betting Obama will do anything to avoid that.
Moral hazard, indeed.
Interrobang
I’m going to put on a play called “Bankstas: The Musical,” featuring a bunch of snarling be-Brooks Brothered toughs singing
We don’t need no regulation
We don’t need no price controls
No regulators in our backrooms
Hey! Taxman! Leave us banks alone!
scav
@gene108: You reading the Guardian? That’s where I’m mostly playing with Barclay’s info — someone there was speculating that Diamond might actually make it in front of the Congress (Senate?) this fall as it can be made to look bad on the regulators as well as the individual banks so there’d be R+D support. And I’d guess there have to ‘Mercan banks involved somewhere, and, what is it, Geither being the one that pinged M. King about Libor in 2008. This is so not my usual world which is almost why I sometimes sit down and try to figure what the hell is going on in it. Libor touched just about anybody with a loan: that could prove notable and easy to communicate. What I like about the JPMC is that they’re so clearly not in control of what they’re doing, for their MOTU footed pjs and all. The catastrophic software update was another MOTU moment to watch in awe too.
Lurking Canadian
Even the worst compulsive gambler in Vegas knows how much he’s got riding on this roll. These guys are completely out of control, but you can rest assured that this trader was believed to be a genius far beyond the ken of mortal men until right before the story broke.
PurpleGirl
@Maude: FDIC = Federal Deposit Insurance Corporation. It insures retail deposits in savings, checking, and certificates of deposit up to $250,000 in any one bank.
Maude
@PurpleGirl:
I know. It insures the account Kindness was talking about at Chase.
Eric Lindholm
Wow, $7 billion! That’s almost as much as the government borrows every three days.