[Gridlock]

JPMorgan blunder raises too-big-to-manage question - May. 11, 2012 (http://money.cnn.com/2012/05/11/news/economy/JP-Morgan-too-big/index.htm?iid=HP_River)

Purely talking about the "social" cost, and not the financial fallout.

So here's another well managed bank doing their own thing and then having to make the call on Thursday after hours that they lost $2 billion dollars in 6 weeks and the number could increase.

Not a damned thing has changed. They still have the keys to the floodgates of the US financial health, which I seem to remember was a smidge of an issue in 2008.

Can they not finally talk about some regulatory reform on companies such as this?

I mean, they have the cash to cover the loss, but is this not some type of warning that , wait for it, JP Morgan Chase Manhattan Bank One Bear Stearns Washington Mutual(if we actually named it for all the banks it ate in the last 10 years) and others like it are too big?

I mean, you can't even make the capitalism argument anymore as they all had their hands in public money-to be honest, I'm not sure if JP got a bailout or just money to assist in taking over WaMu.

Thoughts?

[dhari]

These guys will never learn. I think the culture that they operate in is the problem and that is the hardest thing to change/reform.

[Mr.HappySilp]

let them be. Don't bail them and set an example that the gov does have a back bone..... wait that's only in my dreams......

[jasonturbo]

Even if the end result of this ordeal is a specific risk management unit posting a 2 billion dollar loss... it's such a small percentage of the securities managed by JPM that it's fairly insignificant. The only reason this is making headlines is because JPM has typically managed to avoid the calamity that many of the other big banks have suffered.. Dimon of JPM said it best "we have egg on our face" that's about the extent of this loss and how it came to be.

JPM holds over 2 trillion in assets... So a 2B$ loss is not exactly cause for concern.

Additionally JPM did not ask for TARP funds (25 billion for JPM), it was forced onto them and they paid the TARP money back before any other institution.

It's a well managed company, they take risks to make money just like any other firm, and historically speaking their risk management strategies have been more effective than those of their peers.

What's the social cost?

At the end of the day, if individual consumers weren't so retarded with personal spending, the events leading up to, and financial collapse of 2008 probably would have been avoided. Whether or not you can get a mortgage shouldn't depend on "if a mortgage broker says you can" it should also depend on if you can truly afford your mortgage. (Taking all things into consideration, including your job security and ability to service your mortgage during a period of economic contraction)

If people never perpetuated the housing bubble, it never would have formed.

[Mr.HappySilp]

^^ PPL are dumb and stupid....... you would not beleive some of the things ppl believe in.

[CP.AR]

if you haven't watched this film yet... highly recommend.

Margin Call Trailer - YouTube

[Gridlock]

Even if the end result of this ordeal is a specific risk management unit posting a 2 billion dollar loss... it's such a small percentage of the securities managed by JPM that it's fairly insignificant. The only reason this is making headlines is because JPM has typically managed to avoid the calamity that many of the other big banks have suffered.. Dimon of JPM said it best "we have egg on our face" that's about the extent of this loss and how it came to be.

JPM holds over 2 trillion in assets... So a 2B$ loss is not exactly cause for concern.

Additionally JPM did not ask for TARP funds (25 billion for JPM), it was forced onto them and they paid the TARP money back before any other institution.

It's a well managed company, they take risks to make money just like any other firm, and historically speaking their risk management strategies have been more effective than those of their peers.

What's the social cost?

At the end of the day, if individual consumers weren't so retarded with personal spending, the events leading up to, and financial collapse of 2008 probably would have been avoided. Whether or not you can get a mortgage shouldn't depend on "if a mortgage broker says you can" it should also depend on if you can truly afford your mortgage. (Taking all things into consideration, including your job security and ability to service your mortgage during a period of economic contraction)

If people never perpetuated the housing bubble, it never would have formed.

Very well put.

And I agree that with their portfolio, its a shitty deal for the month, but egg on their face does not equal..."man the shredders". Damn...lost $2bn..guess I have to go for the grande instead of the venti.

I guess the main reason it interested me is the bets are so large that a small movement caused a $2bn loss. It's the same game that happened in 08.

And yes, there is a level of personal responsibility to the whole thing, but the banks that collapsed weren't exactly innocent in the whole affair. For every person willing to sign a redonc mortgage, there was a bank willing to sell it off as an investment, with AAA stamped across the top.

[Death2Theft]

Whats 2 billion dollars when you are the big boy in the big six that controls the money printing presses like really who are they fooling?
The first step to financial reform is reenacting glass steagall act clinton destroyed.
Jon Corzine, Obamas chosen economic advisor that got busted stealing 1+ billion out of customer segregated accounts to cover his own 40:1 failed bets gets in no trouble what so ever. All he had to do was say to the senate " i dont know where it went" and they dont question him at all. Yet when you try to withdraw 10,000 in cash from a bank in the states the amount of paperwork and hoops they make you jump thru to track it is like the great wall of china. Do you really think they dont know where they money went? Think the money went to those who are supposed to deal out the punishment? Now they can't because they are corrupt.

[dat_steve]

DEAF TO ALL DER KORPRATE FAT KATZ!

[Pooface55]

Not sure if I remember correctly, but I remember reading the mortgage mess was suppose to get worse after 5ish years after 2008.

[jasonturbo]

Not sure if I remember correctly, but I remember reading the mortgage mess was suppose to get worse after 5ish years after 2008.

The theory behind this is the ARM crisis.

http://en.m.wikipedia.org/wiki/Adjustable-rate_mortgage

[Duff Beer]

Don't worry, it's only $2B out of the $12B bailout given to them previously :ahwow:

JPMorgan's $12 Billion Bailout - NYTimes.com (http://dealbook.nytimes.com/2008/03/18/jpmorgans-12-billion-bailout/)

[goo3]

i believe jpm paid everything back already

[jasonturbo]

Don't worry, it's only $2B out of the $12B bailout given to them previously :ahwow:

JPMorgan's $12 Billion Bailout - NYTimes.com (http://dealbook.nytimes.com/2008/03/18/jpmorgans-12-billion-bailout/)

The content of the article does not suggest that JPM got a 12 Billion dollar bailout. It suggests that the 12 Billion in market cap surge upon the aquisition of Bear Stearns would indicate that they purchased the company for far less than NAV, 12 Billion less, reflected in the share price jump of 10%.

It was not a bailout, JPM never asked for money to continue their day to day operations, they were the only bank willing and able to take over Bear Stearns to prevent further damage to the liquidity cycle. Did they purchase Bear Stearns for 12 BIllion less than it was worth? I doubt it, and if you can recall, the world was ending back then, and even if you swung a great deal on Bear Stearns you were still assuming a phenominal amount of risk.

[Ferra]

they should start making traders personally accountable for their investment loss to some degree

Right now when they make a risky bet and:
1) Win= million bonus
2) Loss = oops...better luck next time? (well...they might get fired, but can always find another job)

people make more rational, less risky decision when their own money is at stake.

[Death2Theft]

Thats what happens when you have laws written in such a fashion that hurt men to have offspring. They live for their current generation, pile on debt and all risks to the next generation. They could care less because they arn't having kids.
Never thought i'd be a advocate of people having kids but.... shit u learn.

[finbar]

There are plenty of ironies with this one.
The question is why is Jamie (http://www.bloomberg.com/news/2012-05-14/dimon-on-new-york-fed-board-renews-concern-on-potential-conflict.html) a director on the Federal Reserve Bank of New York's board.
The US has the best government money can buy.

[dasani604]

The content of the article does not suggest that JPM got a 12 Billion dollar bailout. It suggests that the 12 Billion in market cap surge upon the aquisition of Bear Stearns would indicate that they purchased the company for far less than NAV, 12 Billion less, reflected in the share price jump of 10%.

It was not a bailout, JPM never asked for money to continue their day to day operations, they were the only bank willing and able to take over Bear Stearns to prevent further damage to the liquidity cycle. Did they purchase Bear Stearns for 12 BIllion less than it was worth? I doubt it, and if you can recall, the world was ending back then, and even if you swung a great deal on Bear Stearns you were still assuming a phenominal amount of risk.

Your knowledge amazes me...teach me your ways :sweetjesus:

[will068]

There are plenty of ironies with this one.
The question is why is Jamie (http://www.bloomberg.com/news/2012-05-14/dimon-on-new-york-fed-board-renews-concern-on-potential-conflict.html) a director on the Federal Reserve Bank of New York's board.
The US has the best government money can buy.

The Fed is private entity. It's as Federal as Federal Express. That just means that Jamie Dimon has placed himself in a favourable position.

[finbar]

The Fed is private entity.

Not quite, Bernanke has to report (http://en.wikipedia.org/wiki/Federal_Reserve_System#Accountability) to congress.


That just means that Jamie Dimon has placed himself in a favourable position.

Jamie gets a say in regulating the bank he works at, a conflict of interests.

[Gridlock]

Not quite, Bernanke has to report (http://en.wikipedia.org/wiki/Federal_Reserve_System#Accountability) to congress.


Well technically so did major league baseball.

[will068]

Not quite, Bernanke has to report (http://en.wikipedia.org/wiki/Federal_Reserve_System#Accountability) to congress.




Jamie gets a say in regulating the bank he works at, a conflict of interests.

That's the fucked up part about it. The Fed can do whatever it wants. It will report to Congress that it fucked up. Then what ? Congress can't do shit unless it passes a law to get rid of the Fed. It also has the right not to disclose whatever transactions it performs. You probably know about the secret Jekyll Island meetings already, but for those of you who do not, check it out.

[will068]

Jamie gets a say in regulating the bank he works at, a conflict of interests.

You actually thinks he's for that though ? It's like being judge and criminal at the same time. Of course he'll have the interest of JPM :awwyeah:

[finbar]

You actually thinks he's for that though ? It's like being judge and criminal at the same time. Of course he'll have the interest of JPM :awwyeah:

At best, it looks bad.

[finbar]

Well technically so did major league baseball.

MLB probably sweated more. :D