JPMorgan Chase, in a surprise announcement, said Thursday that it has suffered trading losses of $2 billion since the start of April.
The 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.
Net losses, after factoring in other securities gains, are expected to exceed $800 million by the end of the second quarter. And losses could increase depending on market conditions and the bank’s actions moving forward, CEO Jamie Dimon said.
The unit had been expected to post a net gain of $200 million.
Dimon, speaking to analysts and reporters on a conference call, said the losses were caused by “errors,” “sloppiness” and “bad judgment.”
“This was a unique thing we did,” Dimon said. “Obviously it had a lot of problems. It was a bad strategy. It became more complex, it was poorly managed.”
Last month, rumors swirled around a JPMorgan employee based in London who had, according to the Wall Street Journal, been taking large positions in credit default swaps, the insurance-like bets that blew up in the 2008 financial crisis. The employee was said to work in the bank’s Chief Investment Office.
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3 Responses
How come I never get suprise winfalls of 2billion dollars
If this was due to speculation it is an argument that banks with federal insurance guarantees shouldn’t be allowed to gamble and rely on the government to bail them out if their bet fails. Both the Tea Party and the “Occupy” seem to agree on this (the moderates tend to work for the banks).
If the “bet” failed, as some suggest, since they were betting on an economic recovery that isn’t coming to pass, then we’ll probably be in for a long summer.
What happened to Dodd–Frank Act? I thought we weren’t supposed to be “surprised” by these things and there was going to be improved transparency and reporting?
Oh! Never mind. Most of those provisions have been gutted in the past year.