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Thread: JPMorgan Loses $2 Billion in Chief Investment Office

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    Quote Originally Posted by washunut View Post
    Can you or any other chicken little in this thread point to anything that remotely put JP Morgan or the financial system at risk?
    While I don't think this is individually that bad, the fact that a department responsible for hedging risk acted in a way essentially opposite really has me wondering who the hell is in charge of these firms. The risk department took steps that any reasonable hedge fund manager would not do, especially after fallout from 2009.

    I agree that no amount of regulation can fix this problem. The fact that they lost that much money on what amounts to an incredible stupid position that they failed to create a viable way of winding down without massive losses leads me to believe that the banks haven't learned their lesson, especially after AIG's near total collapse.
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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    UBS lost $2 billion last year cuz of a rogue trader. $2 billion is chicken feed to JP Morgan Chase.

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    Quote Originally Posted by RDS View Post
    UBS lost $2 billion last year cuz of a rogue trader. $2 billion is chicken feed to JP Morgan Chase.
    I'm not going to argue with that. But I think both you and washunut are missing the point here.

    The department designed to prevent large losses in other departments via hedging itself just took a comparable large loss by doing something rather idiotic. It's kind of like your security guy responsible for preventing break ins at your house getting his own house burglarized. The bottom line impact may be negligible, but the implications are frightening.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    Quote Originally Posted by obvious Child View Post
    What is amazing about this case is that a department that is designed to hedge risk took what amounts to a massive singular position. What is even more insane is that the trader utilized CDS in essentially a naked way.

    What tops the cake is that the managers were okay with this. I don't see how regulation can fix this. You can't fix dumb.
    I have worked with JP in the past, and it doesn't surprise... The firm is so big, it doesn't seem management isn't very effective or knows the ropes of the company. A lot of dumb people can do a lot of dumb **** at a place like that, and 10 to 1, they won't get caught... there are just way too many people to effectively manage. It could be different at other locations than I was at, but the managers where I was, they didn't know anything about anything going on
    Last edited by SheWolf; 05-12-12 at 04:01 AM.

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    JPMorgan Chase has been in a lot of trouble in the past too, they lost a lot in law suits. The company is looking really ineffective, top to bottom. When I saw the headline that the firm was in trouble again, I wasn't very surprised.

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    Quote Originally Posted by SheWolf View Post
    I have worked with JP in the past, and it doesn't surprise... The firm is so big, it doesn't seem management isn't very effective or knows the ropes of the company. A lot of dumb people can do a lot of dumb **** at a place like that, and 10 to 1, they won't get caught... there are just way too many people to effectively manage. It could be different at other locations than I was at, but the managers where I was, they didn't know anything about anything going on
    Please don't tell me you were auditing the New York Office. Because that's what it sounds like.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    Quote Originally Posted by obvious Child View Post
    Please don't tell me you were auditing the New York Office. Because that's what it sounds like.
    LOL... did you audit their NYC office? I did work on a audit, but not in NYC. I know some people who have audited their NYC office though.

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    Quote Originally Posted by obvious Child View Post
    While I don't think this is individually that bad, the fact that a department responsible for hedging risk acted in a way essentially opposite really has me wondering who the hell is in charge of these firms. The risk department took steps that any reasonable hedge fund manager would not do, especially after fallout from 2009.

    I agree that no amount of regulation can fix this problem. The fact that they lost that much money on what amounts to an incredible stupid position that they failed to create a viable way of winding down without massive losses leads me to believe that the banks haven't learned their lesson, especially after AIG's near total collapse.
    I would hope that whomever put of this hedge and his/her get fired and get to learn whatever lessons elsewhere. We should also remember that JP Morgan actually did relatively well in 2008 and was even able to pick up Bean Sterns on the cheap.

    I have not heard enough of the facts to know if this falls in the AIG problem where they were writing insurance against packages on mortgages that they did not fully understand the risk involved.

    We know it is a hedge gone wrong, but usually when one side of a hedge does poorly the other side does well. It would be nice to have Dimon walk the shareholders through what he had hoped to achieve, why it failed and ig they know enough wither to say, this makes no sense or have they found the right way to do it.

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    Quote Originally Posted by SheWolf View Post
    LOL... did you audit their NYC office? I did work on a audit, but not in NYC. I know some people who have audited their NYC office though.
    I'm on the tax side of a Big 4. Barely passed the audit portion of the exam couple years ago.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: JPMorgan Loses $2 Billion in Chief Investment Office

    Quote Originally Posted by obvious Child View Post
    I'm on the tax side of a Big 4. Barely passed the audit portion of the exam couple years ago.
    I think I like tax more, and I am trying to move into tax...

    But since you mentioned it, I would think the NYC office would be worse. That office is probably bigger and less organized.

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