Menu Close

Author: Money Morning Staff

JPMorgan (NYSE: JPM) Losses Keep Unraveling

JPMorgan Chase (NYSE: JPM) beleaguered CEO Jamie Dimon will not be happy when he reads through Friday’s papers.

The Financial Times reported that more than a dozen senior traders and credit experts know that JPMorgan is in a lot more trouble than just suffering $2.3 billion – and counting – in losses.

Turns out the unit at JPMorgan that’s responsible for the loss has been the biggest buyer of European mortgage-backed bonds and other complex debt securities in all markets for three years.

Now JPMorgan has built up positions totaling $100 billion in the same risky financial products that triggered the financial crisis in 2008.

But anyone who followed Money Morning‘s Shah Gilani as he covered the topic knew this was a likely hidden truth.

You see, Gilani told us last Sunday, just days after news of the losses broke, that there was more to these trades than one hedge-gone-wrong.

“The idiots at the bank wanted to hedge against European credit exposure that they had,” Gilani wrote last to his Wall Street Insights and Indictments readers. “They are idiots because the money that’s shepherded by the Chief Investment Office (some $379 billion, yeah, that number is right) is money that the bank has and hasn’t lent out, or technically is “available” to play with. And instead of parking it in U.S. government bonds (Citi has $293 billion of the same float and has 87% of it parked in “governments”), they parked a lot of it in Europe’s crappy credit markets.”

To continue reading, please click here…

RSS
Follow by Email
LinkedIn
Share