JP Morgan Losses Much Higher Than Anticipated; Now Up to $9 Billion
The Daily Sheeple
June 28th, 2012
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When JP Morgan made some bad trades last quarter, CEO Jamie Dimon suggested it was just a few hundred million. Then reports emerged that it could be as high as $2 billion.
It turns out that both numbers were grossly underestimated.
Shares of¬†JPMorgan Chase & Co.¬†tumbled Thursday as a published report said that the bank’s¬†losses¬†on a bad trade may reach as much as $9 billion ‚ÄĒ far higher than the estimated $2 billion loss disclosed last month.
In May,¬†JPMorgan¬†said the loss came from trading in credit derivatives designed to hedge against financial risk, not to make a profit for the New York bank.
The New York Times, citing sources it did not identify by name, said that the losses have grown recently as JPMorgan has been unwinding its positions. The newspaper said its sources were current and former traders and executives at JPMorgan, which is the largest bank in the U.S. by assets.
The New York Times story cites an internal report that JPMorgan made in April that showed the losses could reach $8 billion to $9 billion, in a worst-case scenario. But the newspaper added that because JPMorgan has already been unwinding its positions, some expect that the losses will not be more than $6 billion to $7 billion.
A JPMorgan representative declined to comment.
In a hearing before the House Financial Services Committee last week, Dimon was dismissive when asked if JPMorgan’s losses could total half a trillion or a trillion dollars. He replied bluntly: “Not unless the Earth is hit by the moon.”
Oh, oh. Was that a doomsday prediction, Mr. Dimon?
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