jamie-dimon

JPMorgan Chase takes $2 billion hit on risky credit-default swaps

May 10, 2012

JPMorgan CEO Jamie Dimon, the “King of Wall Street,” has his finger in the dyke again—this time over risky credit-default swaps executed by London-based JPMorgan trader Bruno Michel Iksil.

Iksil’s risky credit-default swaps — which are essentially insurance contracts used to cover risky investments — caught up with the investment bank, bringing $2 billion in trading losses as of today. The losses might rise another $1 billion in the second quarter. Dimon, however, assured investors (and regulators) in a conference call that JPMorgan has plenty in cash reserves to weather the storm.

Dimon, characteristically cocky and bitchy, stated that the trading loss “plays right into the hands of a whole bunch of pundits out there. We will have to deal with that—that’s life.” Yes, life, indeed: Letting traders play around with billions in credit-default swaps, the very same financial instruments that helped unravel the housing market in 2008 and send the world economy plunging into recession.

All in a day’s work, Jamie. He’s quite adept at polishing turds.

At the very least, we should now (at last) question whether Mr. Dimon is really as invincible and responsible as he and others would like to suggest. How one doesn’t have a firm grasp on the fortunes of an investment bank’s trading is baffling, especially in this post-housing bubble economy.

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