JPMorgan profit falls on $4.4 billion trading loss

[maddezmom]

Source: Reuters

Fri Jul 13, 2012 8:08am EDT

(Reuters) - JPMorgan Chase & Co, the biggest U.S. bank, posted $4.4 billion of credit trading losses, but said it had cleaned up the group responsible for the bad bets.

The bank said its Chief Investment Office, which made the trades, was no longer betting on credit derivatives. Another group will manage what is left of the trades.

The CIO, which manages risk for the overall bank and invests excess deposits, will now focus on conservative investments, JPMorgan said. The problems were isolated to the group, the company added.

"We have put most of this problem behind us and we can now focus our full energy on what we do best," Chief Executive Officer Jamie Dimon said in a statement.



Read more: http://www.reuters.com/article/2012/07/13/us-jpmorgan-earnings-idUSBRE86C0G420120713

[Myrina]

1. "Cleaned up the group responsible"

.... in other words, cut them all ENORMOUS severance packages and lifetime parachutes and moved them on to a lobbying/consulting gig.

[Hissyspit]

3. "Group of foxes in hen house reports all foxes have been removed from the hen house."

[Roland99]

2. JPM Admits CIO Group Consistently Mismarked Hundreds Of Billions In CDS In Effort To Artificially Bo

http://www.zerohedge.com/news/jpm-admits-cio-group-mismarked-hundreds-billions-cds-effort-artificially-boost-profits

Back on May 30 we wrote "The Second Act Of The JPM CIO Fiasco Has Arrived - Mismarking Hundreds Of Billions In Credit Default Swaps" in which we made it abundantly clear that due to the Over The Counter nature of CDS one can easily make up whatever marks one wants in order to boost the P&L impact of a given position, this is precisely what JPM was doing in order to boost its P&L? As of moments ago this too has been proven to be the case. From a just filed very shocking 8K which takes the "Whale" saga to a whole new level. To wit: 'the recently discovered information raises questions about the integrity of the trader marks, and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred in the portfolio during the first quarter. As a result, the Firm is no longer confident that the trader marks used to prepare the Firm's reported first quarter results (although within the established thresholds) reflect good faith estimates of fair value at quarter end."

As a result of this, regulators who now are only 3 years behind the curve, are most likely snooping to inquire not only how JPM did it (call us: we can brief you in 2 minutes), but who else has been doing this? Hint: everyone.

Because in other words, we have just discovered that the two key components of the entire CDS market: the LIBOR base and market "marks" have been bogus at best, and realistically, fraud. And one wonders why no bank ever will let CDS trade on an exchange...

Full Filing

[Hissyspit]

4. LA Times: JPMorgan Chase says trading loss grew to $4.4 billion; original estimate was $2 billion.

[harun]

5. People used to invest, now they "bet".