Estimates of the JPMorgan trading loss continue to climb. This is the very same JPMorgan who originally said losses were $1.5 billion or so and whose CEO Jamie Dimon used to preen arrogantly about how they had the best risk managagement of any investment bank.
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.
Let see, if you engage in insanely reckless speculation, lose money then have no freaking clue how much you’ve lost, then I’d say your risk management was nonexistent.
“Essentially, JPMorgan has been operating a hedge fund with federal insured deposits within a bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner.
This is the sorry crux of the matter. Federal oversight of the banks also is also mostly nonexistent, else why did they allow JPMorgan to play the slot machines with depositor and bailout money. I mean, at least slot machines bets are understandable. The disastrous JPM London trade was so convoluted and complicated that maybe no one really understands it.
Banks should not be allowed to do this with depositor money. And until Bill Clinton and Tom DeLay presided over the repeal of Glass-Steagall, banks weren’t allowed to. Of course all the bloated parasites involved in this mess made fat commissions so why should they care what happened? (However the JPM trade is so egregious that the bad PR will force JPM to clawback some of the money but this is just window dressing.)
Our investment banks for the most part are corrupt, venal, and most probably insolvent. They should be put out of their misery so new, healthy institutions can replace them. If we had actual capitalism, this would have already happened. Instead we have a compliant and captured government continuing to prop them up.