JPMorgan Chase & Co. (NYSE:JPM) Chief Executive Officer Jamie Dimon is planning to testify before Congress this week about his firm’s $2 billion trading loss. His Wall Street colleagues do not understand why.
The loss has snatched up $27 billion from JPMorgan’s market value since the May 10 disclosure, while it has triggered at least 5 federal probes and 2 Capitol Hill hearings scheduled with Dimon. It also kick-started a debate about whether curbs on trading by bankers were tightened enough after their wrong-way bets pushed the system to the brink of collapse in 2008.
Executives, lobbyists and analysts say in more than a dozen interviews that the public stir is an overreaction to a small misstep.
Bill Archer,formerly a co- chairman of Goldman Sachs Group Inc. (NYSE:GS)’s capital markets committee and presently a partner at buyout firm Veronis Suhler Stevenson LLC in New York said he kind of shrugs, adding that’s just the way the world is.
JPMorgan shares took a 17% drop as of last week since the New York-based bank, the biggest in the U.S., made public the losses on credit derivatives held by its chief investment office. Fifty-six year old Dimon shifted the unit from a conservative manager of unused cash into a profit center that bet on riskier assets, former employees have said. Some wagers became so big that they were driving prices in the $10 trillion market for and could not easily be unwound, sources reported.
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