A Defense of the Morg
Bruce Krasting's picture
Submitted by Bruce Krasting on 05/13/2012 08:53 -0400
Apple
Bond
headlines
Jamie Dimon
Price Action
Rogue Trader
Transaction Tax
United Kingdom
White House
Wilshire 5000
Yen
Man-o man did the Morg screw up! Let me count some of the ways:
- It announced a $2B loss, but everyone in the market knows its trading book, so the losses have nowhere to go but up.
- Investors took JPM’s stock behind the woodshed and beat it with a stick. The one-day damage resulted in a $14.5B (9.5%) drop in the market cap for the company.
- The SEC, the Fed, and the UK's FSA have all initiated investigations into what went wrong. This insures that this story is going to remain on the front pages for at least another month.
- The timing of this debacle could not have been worse. Any chance that the big banks had of creating some wiggle room on the Volker Rule has been lost. Over time, the tighter regulations that will certainly follow will cost JPM multiples of the loss the have incurred so far. The other big banks have the same problem. The CEOs (and the shareholders) of the big banks must hate Jamie Dimon.
- Dimon will lose one of his best friends, Obama. There is no way the White House can look the other way on regulating the banks anymore. This is an election year, so red meat is needed to get votes. JPM/Dimon has served itself up as a roast beef and is just waiting for folks to start slicing it up.
- By far and away the worst aspect of the story is that the big brass at JPM did not have a clue as to how risky their “hedges” were. The big shots thought that the bank was reducing risk, actually it added (substantially) to the risk it was facing.
It’s possible that I’m the only person in the world (other than Dimon and the JPM Board) who has any sympathy for poor old Morg.
As of today, I’m operating under the assumption that the losses
http://www.zerohedge.com/contributed/2012-19-13/defense-morg?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
| 