Finally, Jamie Dimon and I Agree on Something
JPMorgan Chase’s CEO, Jamie Dimon, says he doesnâ€™t want to make excuses, but his bankâ€™s $2 billion losses in the last 45 days were due to errors, sloppiness, terrible execution, bad judgment and strategy, and the mark-to-market environment.
Want to know something? Â Those are exactly the same things that I would have guessed caused the loss of $2 billion in 45 days. Â I have no trouble imagining Â that those things could contribute to some fairly significant losses.
Dimon also told analysts that in hindsight he should have paid more attention to “trading losses andâ€¦ newspapers”?
Okay, that shocked me. Â I mean, $2 billion is a lot of money to lose in 45 days when it could have been prevented just by noticing the losses and paying attention to newspapers.
I think I’m going to go ahead and send Mr. Dimon a one-year subscription to the New York Times. Â I know he has the money to buy his own subscription… or the entire newspaper for that matter, but he must be terribly busy because he lost $2 billion in 45 days for want to newspapers so it seems the least I can do.
And I sure am glad he didn’t want to make any excuses. Â I hate CEOs that lose billions and then come out making all sorts of excuses, don’t you?
According to CNN/Moneyâ€¦
â€śThe group that suffered the losses is part of the bank’s so-called corporate unit, and had been making trades designed to hedge against risk.â€ť
Wait a minuteâ€¦ they were trying to hedge AGAINST RISK?Â And they LOST $2 BILLION?Â Â Now, that must be frustratingâ€¦ I hate it when that happens. Â Like, when Iâ€™m eating really carefully and I stick a fork right through my cheek.Â Donâ€™t you hate that?
CNN/Money also had the following to sayâ€¦
â€śLast month, rumors swirled around a JPMorgan employee based in London who had, according to theÂ Wall Street Journal, been taking large positions in credit default swaps. The employee was said to work in the bank’s Chief Investment Office.â€ť
So, according to the WSJ on April 6, 2012, the guy had been â€śdubbed the London whale,â€ť and was a â€śFrench-born J.P. Morgan Chase & Co. employee named Bruno Michel Iksil.â€ť
â€śMr. Iksil has taken large positions for the bank in insurance-like products called credit-default swaps. Lately, partly in reaction to market movements possibly resulting from Mr. Iksil’s trades, some hedge funds and others have made heavy opposing betsâ€¦â€ť
Oh, good Lord.Â Weâ€™re still doing this sort of thing, huh?Â Some guy at JPMorgan Chase in London was gambling with credit default swaps, no one was watching, and next thing you know the bank was down $2 billion?
And this came as a surprise to Jamie? Â I guess there’s no system in place at JPMorgan Chase that might of caught the losses at $1 billion, is that right? Â Well, now there’s an idea for a new product that I would think would sell like hot cakes. Â Someone should make a $1 Billion Lost Alarm. Â You know, after you’ve lost a billion… the bell rings.
And since this seems to happen in London most of the time, here’s what the UK version could look like…
And we donâ€™t need the Volker Rule?Â The rule that would prevent banks from placing outrageous bets with their own money, and place limits on the amount of capital they can invest in risky things like hedge funds and swaps, to name but two.Â The rule thatâ€™s part of Dodd-Frankâ€™s financial reformsâ€¦ the ones that are being fought tooth and nail by the financial services industry lobbyists and bank CEO, including Dimon.
According to the Washington Post on May 2ndâ€¦
â€śThe warning fromÂ Daniel Tarullo, a Federal Reserve governor, comes as banks are putting up stiff resistance to new oversight and financial regulations â€” including at a private meeting Wednesday between Tarullo and the heads of Goldman Sachs, JPMorgan Chase and other Wall Street firms, according to the Fed.â€ť
â€śAmong the major new regulations that has been delayed is the Volcker Rule, which would seek to prevent banks from taking excessive risks by curtailing their ability to speculate with their own money â€” rather than on behalf of clients.â€ť
Well, I can certainly understand why no one would want to rush into the Volker Rule, especially with JPMorgan Chase losing $2 billion in 45 daysâ€¦ actually fewer than 45 days.
I guess itâ€™s really none of our business though, right?Â I mean, itâ€™s not OUR bank. Â If JPMorgan Chase wants to take on the kind if risk involved in buying credit default swaps and the like, itâ€™s on them.Â Itâ€™s not like weâ€™re on the hook if they bankrupt themselvesâ€¦ right?
Please say Iâ€™m rightâ€¦