JP Morgan Chase caught gambling again loses $2 billion

[Guest EXPAT]

Sen. Carl Levin (D., Mich.), chairman of the Senate Permanent Subcommittee on Investigations and co-author of legislation that limits trading activities of big banks said:”The enormous loss J.P. Morgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making,”

Jamie Dimon, CEO continues to show his greed and unethical behavior. He's already raping consumers with over 40% interest rates on Chase credit cards.

And even with this gambling loss by betting on hedge funds he still loathes any federal regulations. Is he serious? We need protection from him.

This stuff drives me nuts. The greed in the financial system is out of control.

[Guest hitoallusa]

Just confiscate Dimon's assets and pay for the loss. He created it and he should pay for it. No government bail out this time but probably it will happen again again.. We need a new form of government... Let's be creative...

[Guest FourAces]

They announced today that more losses are expected. I hope we don't bail them out again. I think one second chance is enough.

[TampaYankee]

...and the GOP is dying to let them off of whatever weak leash Dodd-Frank provides. BRING BACK Glass-Steagle!!!!! Break those bastards up into real banks and casinos and let the casino guys play with their own money with winnings taxed as ordinary income like all other gambling winnings are.

[MsGuy]

I found this short article a useful outline of what Morgan has been up to in London. http://www.latimes.c...0,6700867.story

The underlying problem is one of moral hazard. Folks at the top of of these institutions get paid enormous rewards for successful gambles with other peoples money with no corresponding personal downside if things turn ugly.

Hito has a point. If Dimon really thinks this is good practice for his bank, require him to personally guarantee the losses.

[AdamSmith]

Hiito has a point. If Dimon really thinks this is good practice for his bank, require him to personally guarantee the losses.

I do market research on, among other things, engineering/construction of big mofo capital assets. Fluor, Bechtel, others of their ilk do just that -- they self-insure. Judging it to be more cost-effective than commercial insurance.To date they have not been proven wrong.

[MsGuy]

Who is in a better position to assess the risk of big Betchel project than Betchel itself? Surely any underwriting team at an insurer would be asking themselves, "Just what hidden risk is Betchel trying to unload on us?" and price their policy accordingly.

Banks the size of Morgan get a hidden subsidy in the form of lower cost of capital from the market's recognition that they are backstopped by the treasury. Seems to me that subsidy is a pretty good approximation of the risk the market thinks is being shifted to the taxpayers.

So why not either prohibit these banks from playing the casino game or require them to pay that subsidy into an insurance fund. Let's see if Morgan is willing to cough up that five billion bucks a year subsidy (1/4 of one % of assets) to play the game.

The problem with the activities Dimon wants to engage in is that it's basically an "I'm the smartest boy in the room" strategy. Necessarily only one of the boys will prove correct in his self-assessment..

[lookin]

Gotta admit, I still can't get anywhere close to understanding how these credit derivatives work and what the potential for economic disaster is. Until I hear otherwise, I'm going to assume that they could bring down the U. S. economy in the twinkling of an eye, as they nearly did in 2008.

It's the size of the market and its opacity that give me the willies. According to this article, the nominal value of Credit Default Swaps alone is $25 trillion, much bigger than the U. S. annual GDP. Equally spooky is the fact that nobody really knows what the risk is, let alone where it is. If I recall, that uncertainty is what nearly froze the U. S. banking system in 2008.

Jamie Dimon's $2 billion whoops-a-daisy is a blip compared to what could go wrong if this house of cards starts to teeter.

The article also seems to debunk the theory that these derivatives are anything like "insurance", Dimon's blather notwithstanding.

Insurance contracts require the disclosure of all known risks involved. CDSs have no such requirement. Most significantly, unlike insurance companies, sellers of CDSs are not required to maintain any capital reserves to guarantee payment of claims.

Again, my recollection is that AIG's near-demise was based on its inability to pay the claims against it. If this market is as big as it seems, who's to say that the Feds could bail out the banks and stabilize the economy even if we decide they should?

It's amazing to me that these credit derivatives are legal, let alone that they are an integral part of our banking system.

I sure hope some of our more knowledgeable posters can assuage my concerns. In the meantime, I'm fixin' to put my money where my mouth is.

[Guest gcursor]

GREED

Nothing will happen just as it always has happened. You see, JP Morgan Chase recently stated that it had a 2 BILLION dollar trading loss. People get upset. EXXON posts record profits. People get upset. All of it still comes back to greed and people's insatiable thirst for it.

Now the government will look at JP Morgan Chase and do some poking but nothing will change. The CEOs will still rake in their multi-million dollar salaries and their companies will continue to gamble like a drunk guy in a casino. The companies and the CEOs will act with impunity because our culture is built on this greed which has seeped into our very souls.

In November, we will go once again to vote people in the U.S. government who will "improve" things but this will not matter. Money will continue to reign supreme throughout the country and all people will bow down before greed because this is what America is. We say that we want "fairness" between individuals but we really don't. We're all selfish greedy lumps of flesh that trudge on to the next pool of money and suck it in like blood-thirsty mosquitoes. We erect laws that regulate the profits so that the companies can find new ways to get around those laws and make bigger profits.

We hear about the Ponzi schemes that takes millions or billions of dollars from people who invested their life savings because (yes, you guessed it) they were wanting excessive greed! Still the people who invest get their life savings wiped out while the criminals get caught and serve some time somewhere or maybe stay in prison for the rest of their life while thousands of people's lives have been torn to shreds. Nobody cares..least of all the people who commit the crime. They just want to have a taste of the "good life" for as long as they can so they shoot for the stars and see how long they can ride it out. They know that they will get caught but they are going to have a helluva time in the process. I still contend that certain financial schemes who defraud a certain amount of money from x number of people should get the death penalty but we'll pander these people and say "Oh..they're not that bad". The number of lives that they destroyed doesn't compare to what somebody else did.

We will all stand around and wait for Congress once again to stand idly by doing nothing for us saying that they don't have the money to do this or that. Our government grinds to a halt as nobody wants to compromise because let's be honest..they don't care either because they already have their pensions. They can afford to do nothing for the rest of their lives and run the country into the ground because they'll be in their mansion sipping martinis and watching the sunsets.

Greed continues to run amok and nothing and nobody will ever stop it. Make new laws and the greedy will find ways to make MORE money than was possible. This is America