JPMorgan Chase & Co. (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.
Here is a small excerpt from the shareholders conference call.
Some commentary on the loss.
This shows how much volatility still prevails on hedging side. Cannot imagine the worlds renowned institutions failing. It is very clear the US Government allowed the institution of this stature to freely do whatever they feel. It is merely a poor risk assessment. Lehman Brother is another example. Today in our country State Bank of India would have gone through similar turmoil had it not due to strong Government controls. We criticize Indian Government many time but should thank for strong controls. In that sense our financial institutions are in very strong and less volatile than US financial Institutions. Slow and steady India can rise provided we control corruption.
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