Dimons are forever

[macker]

No chance that he gets removed from JP Morgan Chase which is a complete joke. Any other industry if they made a mistake of this scale that was so at odds with the stated principles of the CEO that CEO would remove himself and if not then be fired by the board of directors but it is not going to happen in banking and Jamie Dimon is going to remain in place. Flawed, complex, poorly reviewed, poorly executed and poorly monitored this from the guy who remained profitable in the wake of the Lehman Brothers collapse. The book about him "Last man standing" no longer stands.....Never mind too big to fail.....too big to manage.....

[macker]

CIO just retired......

[normtwofinger]

Huh?

/obligatory unrelated first response

[Regulator75]

[Huntingwhale]

Cool story bro

[Lt.Spears]

WTF is going on in this thread.

[mykalberta]

Its sweet justice cause this is the guy who was leading the charge for less regulation. I could try to be sorry for the house of Morgan, but it would be an outright lie.

[Vulcan]

This I guess.

http://www.slate.com/articles/busine...l_street_.html

[macker]

Originally Posted by mykalberta

Its sweet justice cause this is the guy who was leading the charge for less regulation. I could try to be sorry for the house of Morgan, but it would be an outright lie.

I wonder how big this loss will really end up being.....nobody knows the exact nature of the hedge that they were trying to execute (London Whale) It is a black box so if they are saying 2-3 Billion you can bet it will be more than that. Unwinding a trade of this size is not going to be easy. Similar sized trade took down MF Global. JP is lucky that they are large enough to handle a loss like this and it just blows a piece of their balance sheet apart.

Banks rely way too much on trading these days and a company like Goldman makes 90% of its money from trading. Some of these large trades if done by enough companies could once again bring down the economy. If they aren't going to properly disclose things and nobody knows what they are really up to (including the SEC) they restrict them and have Wallstreet type banks and commercial deposit/loan banks. Everything becomes smaller and simpler. Mistakes like this most recent one that could spread as you go through the credit cycle are far too dangerous. Wallstreet is the one area in life where history repeats itself over and over again. King Jamie

[Cowperson]

Originally Posted by mykalberta

Its sweet justice cause this is the guy who was leading the charge for less regulation. I could try to be sorry for the house of Morgan, but it would be an outright lie.

If the best and brightest can explode themselves in the $650 TRILLION derivatives industry, then it can happen to anyone. And $2 billion here or there isn't difficult to make or lose if you're leveraging with OPM (other peoples' money).

You saw how vague the very blurry line between legitimate hedging and speculating really is in this particular situation. Where does one side start and the other one end?

I'm off and on with the very, very left leaning Paul Krugman, nobel prize winning economist and New York Times commentator, but I do agree with him today on "Why We Regulate."

http://www.nytimes.com/2012/05/14/op...e.html?_r=1&hp

You just can't have financial institutions using depositor's money in speculative leverage in an unregulated industry. That's the minimum price financial instutions have to pay to exist.

Cowperson

[Northendzone]

they should have found themselves three sure games and bought a sport select ticket......

[La Flames Fan]

Not entirely related, but PBS' FRONTLINE did a stellar 4 part series on the crash/financial crisis...Some interesting comments in part 2 about the bailout money and the total lack of regulation that followed.

PART 1:
http://video.pbs.org/video/2226666502

PART 2:
http://video.pbs.org/video/2226666506

PART 3:
http://video.pbs.org/video/2229573859

PART 4:
http://video.pbs.org/video/2229573868

[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.

[Slava]

Well GGG hit the nail on the head here. They had $5.4B in income in the first quarter from $27B. Does $2B hurt? Sure, its better to keep the money. Are they on the brink of bankruptcy though? Hardly, as long as the $2B is accurate.

The banks have got to he stopped from these practices though. The laws must be strengthened to protect consumers and really to protect the banking system as a whole.

[macker]

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.

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

[macker]

Jamie Dimons 2011 pay package which totalled $23 Million got shareholder approval today with 91% of the vote

In other news the FBI are going to investigate JP Morgan

[Slava]

For all of your disdain with Dimon and JPM I'm surprised that you haven't mentioned that Matt Zames came from LTCM...thats clearly amusing.

The FBI seems like a stretch. It doesn't look like laws were broken and just comes back to the laws not being stringent to begin with. You can't legislate intelligence.

[Mr.Coffee]

totally thought this thread title was just an abortion of spelling for the word "diamonds"

[macker]

Originally Posted by Slava

For all of your disdain with Dimon and JPM I'm surprised that you haven't mentioned that Matt Zames came from LTCM...thats clearly amusing.

The FBI seems like a stretch. It doesn't look like laws were broken and just comes back to the laws not being stringent to begin with. You can't legislate intelligence.

At the end of the investigation they can consider filing mail and securities fraud charges which would give them lots of discretion. In this case it won't take much if it is not just simply a very large screw up. You can bet there will be a lot of scrutinizing of the trader who took the position and also the supervisors who bear the responsibility for what is said to investors. Based on how many have "been let go" or "retired" etc. there is a lot more to this. It may just be a big screw but I wouldn't be surprised if there was intent to mislead either. I am glad they were caught on the wrong side of the trade regardless but as you point out history just repeats itself over and over again on Wallstreet. You don't need the JP Morgan Asset Management Value Investor Confidence Index to tell you that trust in Wallstreet has never been lower.

[Flame Of Liberty]

Originally Posted by Cowperson

If the best and brightest can explode themselves in the $650 TRILLION derivatives industry, then it can happen to anyone. And $2 billion here or there isn't difficult to make or lose if you're leveraging with OPM (other peoples' money).

You saw how vague the very blurry line between legitimate hedging and speculating really is in this particular situation. Where does one side start and the other one end?

I'm off and on with the very, very left leaning Paul Krugman, nobel prize winning economist and New York Times commentator, but I do agree with him today on "Why We Regulate."

http://www.nytimes.com/2012/05/14/op...e.html?_r=1&hp

You just can't have financial institutions using depositor's money in speculative leverage in an unregulated industry. That's the minimum price financial instutions have to pay to exist.

Cowperson

Aren't people in OTC derivatives markets BECAUSE they are unregulated? IIRC International Bank for Settlements released data that the total OTC derivatives volume dropped (globally), some claim it is because EU/US want to put strict regulations on it.