|Quoting Pyrex (Reply 20):|
JP Morgan was hedging risks on their BANKING book, not their trading book - you know, the loans they extend out to people and companies, which for some reason some people think is a more "social" use of JP Morgan's capital than facilitating access to capital markets through underwriting and market-making.
Such distinctions matter to you, but don't matter to us because it will be the entire JPM corporation coming to the taxpayers for a bailout.
|Quoting us330 (Reply 22):|
From some of the articles I've been reading, some analysts have said that it wasnt actually serving the purpose of a hedge.
I've read it was both acting as a hedge yet also speculative, which is of course contradictory, but that in itself is why the loss was so unexpected. It was positioned as a hedge, but when you look at it's operation, it was speculation.
The banks want to keep such things in place. The "Voelker Rule" is intended to disallow such things, but the bank lobbyists keep adding more loopholes to it, and keep delaying it by adding more and more loopholes to it, which require more and more analysis. They are now saying the earliest enactment of the Voelker Rule will be 2014.
|Quoting Ken777 (Reply 23):|
Bring back Glass Steagall. Of course the Conservatives will never go far when financial contributions are so leveraged against it.
I'm generally pro-Obama, but this case shows he is failing at financial reform. He used Great Depression rhetoric, but his corrective actions have been far short of the things FDR did post-Depression. IMHO Obama's side is just as beholden to financial interests as are conservatives.
|Quoting us330 (Reply 24):|
FDIC is completely irrelevant here because it only pertains to commercial banking and is done to prevent bank runs. What's of more relevance is the Fed's discount window and lender of last resort access that these banks now have.
|Quoting Flighty (Reply 25):|
He has said yes this is completely contradictory to what I told you a few weeks ago -- his bureaucracy was scurrying to defend the situation, like companies do. But he came to Jesus suddenly, and now, he named the people responsible and is firing them! He ought to get just a little credit for that.
But it points out something very important: these large firms just don't have the ability to judge risks to the degree they claim to.
Note also that the London Whale took home $100M last year based on the very acts Dimon is now so sure were ill-judged.
The industry makes the rewards so huge that it's in everyone's interest to take as much risk as possible, hoping that things go in their favor, but also knowing that they get to keep their bonuses even when things do not go in their favor.
How much you want to bet the Whale writes a tell-all book and makes even more money off this fiasco?
|Quoting StarAC17 (Reply 27):|
Yes and if I get this correctly getting rid of Glass Steagall allowed commercial banks to merge with investment banks and share funds.
This means that the every day depositor has the risk of their money being used in risky bets, which if I have a basic savings account I want that money used in low risk lending and I get a low interest rate in turn.
If people with basic accounts even think that their money is being used for high risk investments that will only increase the chances of a run on a bank.
If I want to take that risk with my money I will go to an investment bank or their investment division and take risks accordingly.
|Quoting QFA380 (Reply 29):|
This merely shows that JP Morgan has internal risk and personnel management problems.
Merely? Their CEO was out sayking how sure he was that his bank could self-regulate, and now he has to admit he himself didn't understand what was going on within his own walls...
|Quoting Pyrex (Reply 42):|
The sheer amount of financial ignorance on this thread makes me really sad about the future of America.
The sheer amount of arrogance of the members of the financial community makes me really sad about the future of America.
We don't want to have to know how high finance works, but now with the move from pensions to 401(k)s we all have to, as well as having to do all the other things in our lives that makes us valuable members of society.
We're fed up with the jerks in the financial community who make money no matter what the market does, but ironically their arrogance is justified because they can and do make money no matter what, whereas the rest of us keep letting it happen.
It shows what arrogant scumbags they are: they keep warping the system to make it work more and more in their favor, and then they taunt us about it.