This irresponsible behavior doesn’t only affect JP Morgan, or even Wall Street — this reckless greed has side-effects that ruin the lives of millions of people all over the world, people who never had anything to do with Wall Street or investment banking. Because of similar behaviors and lack of meaningful regulation, countless innocent people have lost their jobs, their homes and life savings during the global recession. This is not right, this is not just and it must be stopped.
According to Bloomberg BusinessWeek, JP Morgan’s risky trades — and resistance to regulation and oversight — may have cost it a full 7.5 billion dollars. Once lauded as one of the more conservative and cautious investment firms, its reputation has fallen under Jamie Dimon’s leadership.
JPMorgan’s chief investment office has lost $5.8 billion on the trades so far, and that figure may climb by $1.7 billion in a worst-case scenario, Dimon, the bank’s chairman and chief executive officer, said yesterday.
The mounting losses have focused regulators’ and investors’ attention on the CIO. Dimon transformed the once-conservative unit in recent years to boost profit by buying higher-yielding assets such as structured credit, equities and derivatives, Bloomberg News reported on April 13, citing former employees.
One trader, Bruno Iksil, amassed positions in credit derivatives so big and market-moving he became known as the London Whale. Bets on credit-default swaps known as the Markit CDX North America Investment Grade Series 9 backfired this year. Dimon dismissed reports about the London operation as a “tempest in a teapot” when the bank reported first-quarter earnings April 13. He reversed course less than four weeks later, disclosing a $2 billion loss that he said could grow to $3 billion or more during the quarter.
The bank said yesterday it ousted managers responsible for the transactions and will claw back their pay after an internal inquiry found traders may have intentionally tried to hide souring bets during the first quarter.
<a href=”http://www.businessweek.com/news/2012-07-13/jpmorgan-s-botched-trades-may-generate-7-dot-5-billion-loss”>Read the article here.</a>