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2008 All Over Again? JPM Mark to Market Losses Potential at 4 Billion

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posted on May, 10 2012 @ 09:27 PM
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JPM Crashing After It Convenes Emergency Call To Advise Of "Significant Mark-To-Market" Losses In Bruno Iksil/CIO Group




Out of nowehere, JPM announced 40 minutes ago that it would hold an unscheduled 5pm call to coincide with the release of its 10-Q. Rumors were swirling as to why. The reason is as follows:

JPMORGAN SAYS CIO UNIT HAS SIGNIFICANT MARK-TO-MARKET LOSSES - "Fortress balance sheet" at least until Bruno Iskil gets done with it.
JPMORGAN SAYS LOSSES ARE IN SYNTHETIC CREDIT PORTFOLIO - but, but, net is NEVER, EVER Gross.
JPM WOULD NEED $971M ADDED COLLATERAL IF RATINGS CUT ONE-NOTCH
JPM WOULD NEED $1.7B ADDED COLLATERAL IF RATINGS CUT 2 NOTCHES - how about three notches?
JPMORGAN: MAY HOLD SOME SYNTHETIC CREDIT POSITIONS LONG TERM - "Level 3 CDS FTW"
"As of March 31, 2012, the value of CIO's total AFS securities portfolio exceeded its cost by approximately $8 billion"

As a reminder, the CIO unit is where Bruno Iksil was making $200 billion-sized bets. Basically JPM has suffered massive losses at its CIO group most likely due to its IG/HY positions held by Iksil.


www.zerohedge.com...

This is starting to look like Lehman Brothers....

Again, after the markets close they announce this. Essentially, this Bruno Iksil in the JPMorgan CIO Office made some MASSIVE buys into the market - and by huge I mean HUGE. The last 6 weeks they have lost 2 billion, and could potentially lose another billion - the losses are from derivatives. What I am thinking is this though - they are being very upfront about this. What could they be hiding? We know JPM holds over 70 trillion in derivatives. Has that ticking time bomb finally gone off?

I won't be up, but it will be interesting to see what the futures are with this development? Will we see a lock limit down? Basically, it is the limit as to how low they will allow the futures to go.


Another blow to JPM also occured in a bankruptcy decision - Over 200 million was tied up in a pair of Weston Hotels, but a judge today ruled that the loan maturity be increased by 15 years at zero percent interest.




posted on May, 10 2012 @ 09:36 PM
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I was just wondering about the same thing with regard to another Lehman's event when I clicked back in here to consider posting the same story from ZH. Interesting stuff!



posted on May, 10 2012 @ 10:06 PM
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I'm sure they'll make it back tomorrow by shorting their own stock.

edit on 10-5-2012 by mayabong because: (no reason given)



posted on May, 10 2012 @ 10:16 PM
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I read that this is an indicator that JP Morgan is far more deeply into Greek debt than they'd previously admitted and that the "synthetic" investments (jeez-- can't we just kill them just for making stuff up?) were likely a gamble to leverage off some of their bad debts and it blew up on them.

This could be the start of something really big. I can't wait to see what happens next. I'm really hoping this is the end of the "too big to fail."



posted on May, 10 2012 @ 10:21 PM
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Commented on it here

Another thing I've seen mentioned by some is the unexpectedness of it. People are watching Europe and this happens to the biggest US bank. If any of the TBTF are truly solvent, it's probably JPM. Two billion in losses in a couple of weeks is pretty damn impressive.

Most interesting things I'm noticing so far.

Like MF Global the losses happened out of a London office.

Looks like it was a single account.

Looks like the leverage was huge, if ZH is correct it was a 12bps move that was responsible for the loss. That's pretty insane in either the size of a position or the leverage used. I bet the latter. Again a 12bps move caused a $2 billion loss.

Reminds me of certain things that happened in late '07 early '08.

Why are they owning up to it this time? ZH touched on that a little I want to revisit that.

Anyway, I won't make a bet against this market. It'll probably shake it off shortly after the open tomorrow.



posted on May, 10 2012 @ 10:39 PM
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Im thinking this might be big. It seems they are trying to downplay this on msm and it makes me think they are trying to keep from freaking everyone out. We should all be watching the market tomorrow. It's not about how much assets jp Morgan has its about the reaction from world markets



posted on May, 10 2012 @ 10:49 PM
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Also if you are a metal hound it might be the time to pick up some more silver on the small dip that is more then likely gonna happen. You know are going to be dumping theirs (whatever they may actually have in physical compared to paper).

Gonna be some interesting times the next couple of weeks me thinks. Grab the popcorn and and have a beer cuz this may be a show.



posted on May, 10 2012 @ 10:54 PM
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its also about the definition of default,
if the derivitives are designated as "not a technical default"
then the counterparty risk is huge,

the "hedge" wont pay if greeks dont acually default,
this "inbetween derivitve terms and conditions" is when the ratings agencies dont acually call a downgrade or haircut a default.

dangerous

xploder



posted on May, 10 2012 @ 11:21 PM
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reply to post by Flyzoid
 


I think it's a huge understatement that they're making here, too. I mean, since when do the banks play honestly? They lie every chance they get until it's too late. Wait until Friday evening, and maybe then the big news will be released, and even that will be a huge understating lie.

If they admit X amount of bad news, you can bet it's at least 10 times more than that. They're saving their big lie for tomorrow evening, I'd guess. No reason to talk now except as a bit of damage control.

And no sooner for these punks to fail if they don't issue themselves a taxpayer bailout. A domino effect would be what they all deserve. Of course that would spell disaster for the rest of us, but I think that is inevitable, and we've been getting screwed ever since they've been in business. It's about time their times come. Tick tock tick tock...



posted on May, 11 2012 @ 01:33 AM
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DJIA futures are down 94 points.
I get a sinking feeling its going to be a bad day tomorrow!



posted on May, 11 2012 @ 03:07 AM
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Bump because this is huge news. This could be IT.



posted on May, 11 2012 @ 03:38 AM
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Even CNN are running with this story and not totally optimistic either...

JPMorgan loss: Ghost of the credit crisis


JPMorgan Chase CEO Jamie Dimon shocked Wall Street just after the market closed Thursday with news that the company had lost $2 billion since April 1 on trades in credit default swaps.

Sound familiar? It should. Credit default swaps based on housing mortgages created the tinder that was ignited by rising home defaults to create the conflagration of the 2008 financial crisis.

Trading in derivatives such as credit default swaps were designed to hedge against risk. But as we know, banks and other market players used these tools to create products that seemed to take the danger out of risky bets and reaped huge rewards - right up until the moment they didn’t. Banks and other businesses were stuck on the wrong side of the trade, trapped with a mountain of debt they couldn’t pay.

Speaking on a Thursday conference call – which the Financial Times’ Alphaville called “the most excruciating bank conference call we’ve ever heard” – Dimon said JPMorgan's losses stemmed from trades designed to hedge against risk, but those trades went awry due to "errors," "sloppiness" and "bad judgment." It doesn’t help that, just a month ago, Dimon decried the build-up of credit default swaps at JPMorgan’s London office, first reported by the Wall Street Journal, as a “tempest in a teapot.”

The losses of the past six weeks were mitigated by successful hedges that played out, Dimon said, but the bank expects its losses to exceed $800 million by the end of this quarter. And it stands to lose a further $1 billion more due to market volatility.

Still, some nagging questions remain, such as whether the losses were contained only to JPMorgan and not any other major banks.

As CNNMoney reports, CLSA analyst Mike Mayo pushed Dimon on whether he thought other banks could be in the same situation. "I don't know," Dimon sighed. "Just because we're stupid doesn't mean everyone else was."

Not a comforting response, given the lemming-like cliff dive of the big investment banks in the run-up to the credit crisis.


Mayo was most discomfited by the fact these lapses in judgment occurred inside the JPMorgan’s Chief Investment Office, or CIO, which manages $375 billion in securities. “Here is a key point: this loss occurred in a risk-mitigation unit and not a risk-taking one,” Mayo wrote in a note to investors. “The bigger issue is who was watching the CIO office? We think this raises issues about checks and balances at a $2tn bank that has performed better than peers.”

Mayo told CNN’s Katy Byron: "It's like if you say to your wife, 'Honey I went out and bought insurance on a house last month,’ and you come back a month later and say you lost $100,000 on the insurance policy."

Mayo said it’s clear the losses weren’t the result of one bad trade, but a break down on several levels. "(It) raises the issue – are these big banks too big to manage? There should be controls, overseers, checks and balances,” he said.

And the loss raises the specter that lessons from the credit crisis have yet to be learned. "Our financial system is still not under control,” Mayo said. “The problems that led to the financial crisis are brought up again when something like this happens."

Dimon said new risk modeling tools brought out in the first quarter have been shelved as a result of the losses. The loss comes at a time when banks are fighting the Volcker rule, due to come into force on July 21, which will curtail bank’s ability to trade with their own money.

Meanwhile, as the Economist reported last month, efforts to better regulate derivatives trading have been half-hearted and ill-funded.

JPMorgan’s loss suggests that derivatives trading remains a hazardous business, a “risk management” tool that has yet to be tamed.



posted on May, 11 2012 @ 08:25 AM
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Cramer is sh$&!ing his pants right now! I can tell he's trying to keep the masses calm
By defending jp Morgan. A little hint he has stocks with them



posted on May, 11 2012 @ 11:37 AM
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I hope it is 2008 all over again. With the OWS protests going on and then this happens; if they et a bailout it will precisely show what the OWS people are complaining about



posted on May, 11 2012 @ 11:41 AM
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yes and then 100's of thousands of people will lose their jobs... throwing us back into a recession, cuz if Chase goes... a lot of other Non-evil businesses (if there are any to the OWS people you know outside apple/toyota and starbucks)



posted on May, 11 2012 @ 02:23 PM
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Haha. In all honesty, if this is 'it', then i cannot wait for it to happen. Honestly, i want this all to come to an end. I want the truth to be pumped over the airwaves. How the world has been used by people to further their own chaotic agenda. How they keep poor nations poor, starving, and sick.

But that would be too much to ask :|. JP Morgan has set us back 100 years with their greed, along with everyone else involved in this huge fraud of a financial market. Will it be hard? Hell yes. Change is never easy.
edit on 11/5/12 by AzureSky because: (no reason given)



posted on May, 11 2012 @ 07:35 PM
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Well unless this is the start of some snowball event, then looks like little more than a hiccup on world financial markets.



posted on May, 11 2012 @ 07:56 PM
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Lets see what Monday brings but I'm not too worried they will find a way to get their quaterly bonuses out of this



posted on May, 11 2012 @ 08:06 PM
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i wonder if the peoples attack on the JPM silver ETFs are a component of the JPM $2bn loss...

you know for sure they cook the books to show anything they wish...
but JPM was down graded to AA+ or something (...hey i sucked some suds in the last 5 hrs)

so they have until Monday to fashion some sorta excuse or cover story !

 



Lets see what Monday brings but I'm not too worried they will find a way to get their quaterly bonuses out of this


Oh they will get their bonuses... its just a matter if the taxpayers give the money or the shareholders pony the buck$ up.

edit on 11-5-2012 by St Udio because: (no reason given)



posted on May, 11 2012 @ 11:54 PM
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So what's the difference between this and Lehman's in 2008? Well Lehman's filed for bankruptcy, yeah? I'm just trying to understand what parallels are evident where people and media are comparing the two with potentially disastrous consequences.



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