JPMorgan Chase & Company's stocks tumble with news of massive losses
Banks reportedly lost $9 billion instead of $2 billion
Nothing sends stocks downward that previously suppressed bad news. Such
was the case of JPMorgan Chase & Company, as their shares fell in
premarket trading this week. A recently published report said that the
bank's losses on a bad trade may be as high as $9 billion, which is far
higher than the estimated $2 billion loss as announced last month.
The New York Times, reporting from anonymous sources said that the losses have grown as JPMorgan has been unwinding its positions. According to the Times, their sources were current and former traders and executives at JPMorgan, which is the largest bank in the U.S. by assets.
The newspaper also cited an internal report that JPMorgan made in April that showed the losses could reach $8 billion to $9 billion, in a worst-case scenario. However, since JPMorgan has already been unwinding its positions, some expect that the losses will not be more than $6 billion to $7 billion.
JPMorgan CEO Jamie Dimon at the time of the loss had apologized to shareholders. Shortly after the loss was disclosed, Chief Investment Officer Ina Drew, who oversaw the trading group responsible for the trade -- left the company.
JPMorgan has lost about $23 billion in market value since the losses came to light on May 10.
There are increased concerns that the biggest banks still pose risks to the U.S. financial system, less than four years after the financial crisis in the fall of 2008.
Dimon was dismissive when asked if JPMorgan's losses could total half a trillion or a trillion dollars in a hearing before the House Financial Services Committee last week. "Not unless the Earth is hit by the moon," Dimon snapped.
Dimon declined putting an exact number on the bank's trading loss, but did say that JPMorgan will have a solidly profitable quarter. JPMorgan plans to give more details related to its losses when it reports second-quarter earnings on July 13.
The company's stock dropped $1.03, or 2.9 percent, to $35.71 in premarket trading.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.
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General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
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Keywords: JPMorgan, stocks tumble, loss, CEO Jamie Dimon
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