JPMorgan has just reported a $2 billion loss on synthetic credit securities (can you say Greek credit default swaps?).
JPM is plunging in after-hours trading, down nearly 6%.
But Jamie, I thought you promised a Greek default would be contained and a ‘non-issue’?
Makes one wonder how much JPM will lose on the next Greek default, which is looking increasingly imminent as the ECB is withholding the next bailout tranche to Greece.
JPMorgan Chase & Co. (JPM) (JPM) Chief Executive Officer Jamie Dimon said the firm lost about $2 billion on synthetic credit securities after an “egregious’” failure in its chief investment office, which the bank says focuses on hedging.
“This portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed,” the New York-based company said today in a quarterly securities filing. JPMorgan declined 5.5 percent to $38.50 in extended trading at 5:55 p.m. in New York.
The chief investment office has been transformed in recent years under Dimon into a unit that makes bigger and riskier speculative bets with the bank’s money, according to five former employees, Bloomberg News reported April 13. Some bets were so big that JPMorgan probably couldn’t unwind them without losing money or roiling financial markets, the former executives said.
And a market snapshot of JP Morgan in after hours trading:
JPMorgan Chase & Co. (JPM)