Quote:
Originally Posted by GGG
What is JP's total income. I mean is a 2 billional dollar mistake that big of deal. I know I have made a 20k mistake without consequnce as they were absorbed by projects budget.
Is 2 billion dollars a huge loss or just the run of the mill cost of doing buisnesses. The other thing to remember in these large hedges is someone won 2 billion dollars as well.
The step where we need regualtions is to limit the amount of leveraging these banks can do so that one trasaction can't wipe out a bank.
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The balance sheet is in the trillions and take in 20-30 billion on an average year. RBC for a comparison sees a good quarter at about 1 billion and good year 4-5 billion. JP can absorb this and have it dealt with in 1-2 quarters if the loss is what they say 2-3 billion. Fact remains that if Jamie Dimon and JP Morgan can't manage risk properly then who can. The problem is that the banks make 70-90% of their money on trading and the bigger the trade the better so there is clearly an incentive to use leverage and take risk. For these traders if you aren't using leverage and taking a lot of risk your bonus will suffer
