NYT: JPMorgan Prop Trading Loss May Reach $9 Billion
It's 3:45 am and I decide to check the wires one final time before sleep. Looks like the London Whale hedge prop bet is becoming more painful to JPMorgan's bottom line and Dimon's fragile ego. Pretty solid timing on the leak from JPM insiders as well, as this story will soon to be buried by headlines on Obamacare and Fast and Furious as the House votes on Eric Holder and SCOTUS rules at 10 am EST.
Just two days ago the FT reported that things might be looking up for JPM.
IG9 index trading for bitchez, on sale at Amazon, now.
#SucksToBeJamie
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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.
As JPMorgan has moved rapidly to unwind the position — its most volatile assets in particular — internal models at the bank have recently projected losses of as much as $9 billion. In April, the bank generated an internal report that showed that the losses, assuming worst-case conditions, could reach $8 billion to $9 billion, according to a person who reviewed the report.
With much of the most volatile slice of the position sold, however, regulators are unsure how deep the reported losses will eventually be. Some expect that the red ink will not exceed $6 billion to $7 billion.
Jun 28, 2012 at 4:19 AM
Reader Comments (4)
http://investor.shareholder.com/jpmorganchase/secfiling.cfm?filingID=19617-11-264
It's all there on the last three pages (pp 210-12), "I, James Dimon, certify...."
http://www.reuters.com/article/2012/07/05/us-utilities-jpmorgan-ferc-idUSBRE8620LK20120705
[snip]
The Federal Energy Regulatory Commission (FERC) filed a petition in federal court in Washington on Monday asking the court to order the bank to show cause as to why it would not comply with a subpoena issued by the commission as part of its investigation into the bank's power trading.
On Thursday, U.S. District Judge Colleen Kollar-Kotelly gave the bank until July 13 to submit an explanation as to why the court should not enforce FERC's subpoenas. JPMorgan has asserted the emails are protected by the attorney-client privilege.
"UPDATE 6-28-12: This morning the New York Times Dealbook rewrote my scoop about a possible $9bn loss for JPM and didn’t credit me for reporting this first. They’ve done journalism theft like this before when I was scooping them at the New York Post during the financial crisis. Times reporters like Andrew Ross Sorkin led the scoop stealing behavior during 08 and this morning I see him doing the same thing on CNBC.Sorkin claimed ‘his sources’ were saying reported losses will be closer to $4-6bn – a number he read on June 21st when Mark DeCambre (my former jurno peer) 1st reported it at the New York Post. Scoops are assets for journalist and I don’t appreciate the New York Times or Sorkin taking my hard-earned research and sourcing and using it as their own without a mention or link to my original reporting."
http://www.teribuhl.com/2012/06/26/jp-morgan-managers-being-told-trade-loss-is-9-billion