OOPS little mistake.. JPMorgan CEO says $2-billion trading loss not life threatening

[NickTheCage]

Which is why this really isn't that big of a story.

Yep .. but when you are dealing with the likes of Gio, this is as big a story as those jobs that Romney sent overseas, which she is still trying to find for me

[BarryG]

Oopps .. they still had a $5B profit in the 2nd 1/4 which gives them even more room to write down any extra losses that may occur from these trades.

For one thing, it should be a wakeup call to shareholders, board members, and the entire industry that there is only so much "risk" you can "manage." However since public money was used to prop these banks up, they should have some accountability for not jerking around with billions of dollars. Yeah they are still profitable this time, but if their highly paid professionals can f up on a scale this big, it raises concerns that they could fail again. This is an argument to eliminate "too big to fail" instead of encouraging it as we have been doing via the wrong kind of regulation and implicit guarantees.

[raider.adam]

Yep .. but when you are dealing with the likes of Gio, this is as big a story as those jobs that Romney sent overseas, which she is still trying to find for me

Right. It is the equivalent of a news story of something like a logistics manager at Hershey screwing up deliveries of chocolate for Halloween costing them millions of dollars, but still turning millions of dollars in profit for the year. Sure you go "boy that was dumb and I am sure people are getting fired over it", but nothing illegal took place.

It's a story about a major company ****ing up. It's only a story because it was a bank.

[BarryG]

Right. It is the equivalent of a news story of something like a logistics manager at Hershey screwing up deliveries of chocolate for Halloween costing them millions of dollars, but still turning millions of dollars in profit for the year. Sure you go "boy that was dumb and I am sure people are getting fired over it", but nothing illegal took place.

It's a story about a major company ****ing up. It's only a story because it was a bank.

That the public will be on the hook to bail out if it fails.

[NickTheCage]

That the public will be on the hook to bail out if it fails.

So dont allow that to happen

[BarryG]

So dont allow that to happen

Ok. But the bailouts are still on the public's mind and there is no indication that the govt won't bailout banks again in the future... hence, it is news.

[Naveen]

Yep .. but when you are dealing with the likes of Gio, this is as big a story as those jobs that Romney sent overseas, which she is still trying to find for me

Right. It is the equivalent of a news story of something like a logistics manager at Hershey screwing up deliveries of chocolate for Halloween costing them millions of dollars, but still turning millions of dollars in profit for the year. Sure you go "boy that was dumb and I am sure people are getting fired over it", but nothing illegal took place.

It's a story about a major company ****ing up. It's only a story because it was a bank.

That it's a bank is the whole point. I think there's something much more basic here that makes the story newsworthy that you guys are missing.

In 2008 the collapse of one large financial institution created a domino effect that took down the entire financial system. Sure that led to bailouts...but more fundamentally it led to the worst recession we've seen in 2 or 3 generations, one which we're still feeling the effects of. People lost their jobs, their homes, saw their 401ks tank, saw life-savings funds depleted...and those were just the immediate effects. (How many people who lost their jobs also lost their healthcare insurance at the same time, soon found themselves sick, and then couldn't pay for their or their families medical bills?)

I'm fairly certain a logistics manager at Hersey screwing up wouldn't do the same thing.

Moreover, the story is a tell as to where Wall Street's head is, which is to say the culture at the big banks hasn't fundamentally changed post-2008. And that's doubly scary since the remediation tools at our disposal in 2008 have been pretty much used up, both financially and politically.

[raider.adam]

But JP Morgan isn't failing. A $2 billion loss in the grand scheme of a $5 billion profit.

But I will agree that yeah, the fear it generated shows that they haven't fixed the "too big to fail" problem.

[NickTheCage]

That it's a bank is the whole point. I think there's something much more basic here that makes the story newsworthy that you guys are missing.

In 2008 the collapse of one large financial institution created a domino effect that took down the entire financial system. Sure that led to bailouts...but more fundamentally it led to the worst recession we've seen in 2 or 3 generations, one which we're still feeling the effects of. People lost their jobs, their homes, saw their 401ks tank, saw life-savings funds depleted...and those were just the immediate effects. (How many people who lost their jobs also lost their healthcare insurance at the same time, soon found themselves sick, and then couldn't pay for their or their families medical bills?)

I'm fairly certain a logistics manager at Hersey screwing up wouldn't do the same thing.

Moreover, the story is a tell as to where Wall Street's head is, which is to say the culture at the big banks hasn't fundamentally changed post-2008. And that's doubly scary since the remediation tools at our disposal in 2008 have been pretty much used up, both financially and politically.

Do you think any economic system, from the laissez faire that I desire to the 'perfect' centrally planned economy that you and the majority of posters desire, can stop recessions from ever happening again?




//And I would debate the 08 recession and the late 70's recession in terms of which was worse

[NickTheCage]

But JP Morgan isn't failing. A $2 billion loss in the grand scheme of a $5 billion profit.

This past 1/4 they showed it as $4B+ but when all said and done, I think it is going to be $6B on the trade.

But I will agree that yeah, the fear it generated shows that they haven't fixed the "too big to fail" problem.

Do you actually think they ever will?

[BarryG]

But JP Morgan isn't failing. A $2 billion loss in the grand scheme of a $5 billion profit.

But I will agree that yeah, the fear it generated shows that they haven't fixed the "too big to fail" problem.

Not only is the loss huge--$6 billion and counting--the traders attempted to hide it: JPMorgan says traders may have tried to hide big loss

Banking is essentially a global public utility at this point. A single failure of a big bank can bring down the world economy and there are legitimate concerns that the way these institutions are run is haphazard, irresponsible, and dishonest. The LIBOR scandal, which will likely spread, reenforces this. If a power or water company was run this way, we would be outraged, as we should be about the banks.

This is nothing like a mistake in a chocolate factory.

Of course there is one easy fix to solve "too big to fail"--separate commercial and investment banking. If that were the case today, we could just laugh at JPMorgan's bumbling loss, not be scared for the stability of the global economy.

[raider.adam]

Of course there is one easy fix to solve "too big to fail"--separate commercial and investment banking. If that were the case today, we could just laugh at JPMorgan's bumbling loss, not be scared for the stability of the global economy.

And I would be ok with that for the simplicity of the solution.

[govtstatistic]

somebody's gotta pay for it,
and somebody's gotta pay for their bonuses also

U.S. investigates whether JPMorgan traders hid losses
and it is fast approaching 6 billion
do I hear 7