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

[Gio7707]

an insult to all the hard working people ....

and i guess jamie dimon will eat at his favorite restaurant tonight ...while i have fish and chips ..

JPMorgan CEO says $2-billion trading loss not 'life threatening' - latimes.com

[raider.adam]

If it is simply mismanagement, I am not so much worried about that. I am more concerned about the Corzine scenario where laws were actually broke and no one is paying for it.

[Gio7707]

If it is simply mismanagement, I am not so much worried about that. I am more concerned about the Corzine scenario where laws were actually broke and no one is paying for it.

yup correct ... and corzine's simple answer was :

" WE DON'T KNOW WHERE THE MONEY WENT" ....

and again I will eat fish and chips ...

[geoffrobinson]

So I've read a few different things.

One was that this was based out of London. If this is happening in London, what affect can American regulations can do? Seriously, I'm not sure.

The second thing was that this hedge was set up to protect JP Morgan from losses. That's incredibly ridiculous. All that shows is that these things are too complicated to understand and probably that life is too complex with too many variables.

[Naveen]

The second thing was that this hedge was set up to protect JP Morgan from losses. That's incredibly ridiculous. All that shows is that these things are too complicated to understand and probably that life is too complex with too many variables.

Future generations are going to wonder what the hell we were thinking when we didn't break up the big banks after the financial crisis.

[BarryG]

Future generations are going to wonder what the hell we were thinking when we didn't break up the big banks after the financial crisis.

all it would have taken is a reinstatement of glass-Steagal.. Instead we got the 2000 page dodd-frank which doesn't do anything to prevent too big to fail.

[Naveen]

all it would have taken is a reinstatement of glass-Steagal.. Instead we got the 2000 page dodd-frank which doesn't do anything to prevent too big to fail.

I think Glass-Steagall would have helped. But I'm under the impression that a lot of the speculative derivatives trading wouldn't have fallen under Glass-Steagall. Basically, even if GS was still on the books, a lot the speculation of the 2000s would have still occurred without new regulations stop them, which we weren't going to get b/c we've been in an anti-regulatory mood for decades (but particularly the late 90's/2000s).

[Gio7707]

Ok..so the heads are getting cut ...\

JPMorgan exec expected to resign, AP source says - BusinessWeek

JPMorgan Chase is expected to accept the resignation of one of the highest-ranking women on Wall Street after the bank lost $2 billion in a trading blunder, a person familiar with the matter said Sunday.

The bank will accept the resignation of Ina Drew, its chief investment officer, the person told The Associated Press, speaking on condition of anonymity because the person was not authorized to discuss the decision publicly.

Drew, 55, one of the highest-paid officials at JPMorgan Chase, had offered to resign several times since CEO Jamie Dimon disclosed the trading loss on Thursday, the person said. Pressure built on the bank over the weekend to accept.

At least two other executives at the bank will be held accountable for the mistake, the person said.

Wonder how much $$$$ she will take with her .... it's all b#ll sh*t and a game ...as one of my customers always says ...

[BarryG]

I think Glass-Steagall would have helped. But I'm under the impression that a lot of the speculative derivatives trading wouldn't have fallen under Glass-Steagall. Basically, even if GS was still on the books, a lot the speculation of the 2000s would have still occurred without new regulations stop them, which we weren't going to get b/c we've been in an anti-regulatory mood for decades (but particularly the late 90's/2000s).

Under the original interpretation of GS this trading was banned. In the 80s, at the request of the banks, the SEC and other regulators started chipping away at GS by reading it more liberally. There's an interesting article about this, I'll try to post it later.

[Naveen]

Wonder how much $$$$ she will take with her .... it's all b#ll sh*t and a game ...as one of my customers always says ...

Not to mention how much she's already made. When Lehman Bros. went under it had $613 Billion in debt. Did CEO Dick Fuld have to turn over any of the money he made? When you're an exec at a big corp., the only thing you have to lose is your reputation. And when you're dealing with a bunch of narcissists, that doesn't do much to promote accountablity.

Under the original interpretation of GS this trading was banned. In the 80s, at the request of the banks, the SEC and other regulators started chipping away at GS by reading it more liberally. There's an interesting article about this, I'll try to post it later.

GS bans speculation, but doesn't it require SEC enforcement? i.e., the SEC has to look at the internal books and say "you're over-leveraged". I totally agree with you: repealing GS was a mistake. But I'm just wondering, even if GS was on the books, would a lot of the speculation have still been stopped when you had an SEC that had gone into a self-induced coma? Or did GS have enough mandatory checks that it would have stopped the speculation w/o regulators having to do their job?

[BarryG]

GS bans speculation, but doesn't it require SEC enforcement? i.e., the SEC has to look at the internal books and say "you're over-leveraged". I totally agree with you: repealing GS was a mistake. But I'm just wondering, even if GS was on the books, would a lot of the speculation have still been stopped when you had an SEC that had gone into a self-induced coma? Or did GS have enough mandatory checks that it would have stopped the speculation w/o regulators having to do their job?

The whole point of GS is about separating commercial banks from investment banks. So when an I Bank makes bad bets, it doesn't bring down the entire financial system and put consumer savings and credit at risk. "Too big to fail" is an impossibility. Prop desks, like the one at JPMorgan that took the $2B loss, would not have been allowed at commercial banks under GS. The SEC may have been asleep at the wheel leading up tot the crash, but with GS in place enforcement is very easy. You can't really hide all the mergers and investing that brought on the risk.

Here is the article about how the Fed starting chipping away at GS in the '80s:
Mr. Weill Goes To Washington - The Long Demise Of Glass-Steagall | The Wall Street Fix | FRONTLINE | PBS

[raider.adam]

GS bans speculation, but doesn't it require SEC enforcement? i.e., the SEC has to look at the internal books and say "you're over-leveraged". I totally agree with you: repealing GS was a mistake. But I'm just wondering, even if GS was on the books, would a lot of the speculation have still been stopped when you had an SEC that had gone into a self-induced coma? Or did GS have enough mandatory checks that it would have stopped the speculation w/o regulators having to do their job?

Which gets into a very common talking point. What is the point of new regulations when the enforcement agency(ies) failed enforcing existing ones.

The SEC is also an example of why I don't like government board setups that way. You can't fire people for not doing their job and when they do screw up, you don't get to hold anyone accountable.

[Gio7707]

Elizabeth Warren ...I followed her since ever ...

Warren: Bank self-regulation "wrong and dangerous" - CBS News

Warren repeated her call for the bank's chief executive, Jamie Dimon, to step down from his role as a top official at the New York Federal Reserve Bank, which oversees the nation's largest banks.

"We have to say as a country, no, the banks can not regulate themselves," Warren said in an interview with "CBS This Morning," adding "what has happened here is not just about JPMorgan Chase."

"They are financial institutions that run the risk of taking down everyone's job, run the risk of taking down everyone's pension, run the risk of taking down the entire economy and that means it is appropriate to have some government oversight," she said.

In an interview that aired Sunday on NBC, Dimon said he was "dead wrong" to dismiss concerns raised a month earlier about the bank's trading practices as a "tempest in a teapot."

Dimon has been one of the most vocal opponents of the new rule aimed at preventing risky trading that was proposed in the wake of the 2008 financial crisis. Named after former Fed chairman Paul Volcker, the Volcker rule essentially would have banned the banks from using their own money to gamble in the financial markets.

[NickTheCage]

Elizabeth Warren ...I followed her since ever ...

Warren: Bank self-regulation "wrong and dangerous" - CBS News

Warren repeated her call for the bank's chief executive, Jamie Dimon, to step down from his role as a top official at the New York Federal Reserve Bank, which oversees the nation's largest banks.

"We have to say as a country, no, the banks can not regulate themselves," Warren said in an interview with "CBS This Morning," adding "what has happened here is not just about JPMorgan Chase."

"They are financial institutions that run the risk of taking down everyone's job, run the risk of taking down everyone's pension, run the risk of taking down the entire economy and that means it is appropriate to have some government oversight," she said.

In an interview that aired Sunday on NBC, Dimon said he was "dead wrong" to dismiss concerns raised a month earlier about the bank's trading practices as a "tempest in a teapot."

Dimon has been one of the most vocal opponents of the new rule aimed at preventing risky trading that was proposed in the wake of the 2008 financial crisis. Named after former Fed chairman Paul Volcker, the Volcker rule essentially would have banned the banks from using their own money to gamble in the financial markets.

This idiot is such a fail! Do not bailout, execs have been fired and they maybe more heads rolling, stock has lost, stock is down 12%, board of directors may or may not make changes at the top, customers will lose faith, etc. etc ... that is free market punishment/regulation.

Would LLoyd Blankfien still be earning $25M today if the Feds didn't bail GS out?

[NickTheCage]

The whole point of GS is about separating commercial banks from investment banks. So when an I Bank makes bad bets, it doesn't bring down the entire financial system and put consumer savings and credit at risk. "Too big to fail" is an impossibility. Prop desks, like the one at JPMorgan that took the $2B loss, would not have been allowed at commercial banks under GS. The SEC may have been asleep at the wheel leading up tot the crash, but with GS in place enforcement is very easy. You can't really hide all the mergers and investing that brought on the risk.

Here is the article about how the Fed starting chipping away at GS in the '80s:
Mr. Weill Goes To Washington - The Long Demise Of Glass-Steagall | The Wall Street Fix | FRONTLINE | PBS

Government endangers the 'entire' financial by killing competition in banking and most importantly currency.

[BarryG]

Government endangers the 'entire' financial by killing competition in banking and most importantly currency.

No doubt the burdens of regulation encourage large banks that can deal with the overhead. That's why I support simple, lightweight regulation like GS over of the thousands of pages of loopholes-ridden garbage our legislatures write that only protects the entrenched conglomerates that can afford to manage it.

[phillyaggie]

To me, the bigger insult among the corporate scams news has been the firing of Yahoo!'s CEO today, who has been at his job for only about 4 months but will likely be taking a nice fat golden parachute with him worth millions. Oh, and btw, he got fired because he lied on his resume. And, btw, more insult to injury is the fact that he fired a good chunk of Yahoo!'s staff in the 4 months he was there... you know, the everyday Joes who actually run the company and most are likely more qualified and educated than that bozo.

Shame! Shame! Shame!

[raider.adam]

Sdly everyone plays in the game.

Union Pension Scam? Feds Investigating | Via Meadia

[NickTheCage]

all it would have taken is a reinstatement of glass-Steagal.. Instead we got the 2000 page dodd-frank which doesn't do anything to prevent too big to fail.

What would glass- stegle done to stop this $2B loss?

Banks make bad loans or trades all the time .. should they be forced to stop making loans or trades when that happens?

[five apples]

Which gets into a very common talking point. What is the point of new regulations when the enforcement agency(ies) failed enforcing existing ones.

The SEC is also an example of why I don't like government board setups that way. You can't fire people for not doing their job and when they do screw up, you don't get to hold anyone accountable.

Very little the banks did was against the regulations in place leading up to the crisis. Glass-Steagal, which doesn't exist anymore would have prevented some of the crisis, but the investment banks would have still been in trouble. As to the current problem, it is possible they violated the Volker rule.

The SEC was gutted by the Bush Administration and the Congress and is still by all accounts way underfunded to catch anything.