Youâ€™ve probably heard by now that JP Morgan recently lost over $2 Billion through trading of obscure instruments called â€œsynthetic credit derivatives.â€ What exactly, is a synthetic credit derivative? To me, it appears to be just another smoke-and-mirrors instrument that Wall Street has come up with to fatten its walletâ€”usually at the expense the average American investor.
The Justice Department and the FBI are currently investigating â€“ but substantial change in how these companies behave is unlikely. Wall Street firms simply donâ€™t care about ordinary Americans, and they prove it every day with their irresponsible decisions. As IBN Live reports:
JPMorgan Chase, the largest bank in the United States, said on Thursday that it lost $2 billion in the past six weeks in a trading portfolio designed to hedge against risks the company takes with its own money.
The company’s stock plunged almost 7 per cent in after-hours trading after the loss was announced. Other bank stocks, including Citigroup and Bank of America, suffered heavy losses as well.
“The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought,” CEO Jamie Dimon told reporters. “There were many errors, sloppiness and bad judgment.”
The loss came in a portfolio of the complex financial instruments known as derivatives, and in a division of JPMorgan designed to help control its exposure to risk in the financial markets and invest excess money in its corporate treasury.
Bloomberg News reported in April that a single JPMorgan trader in London, known in the bond market as “the London whale,” was making such large trades that he was moving prices in the $10 trillion market.
Dimon said the losses were “somewhat related” to that story, but seemed to suggest that the problem was broader. Dimon also said the company had “acted too defensively,” and should have looked into the division more closely.
The loss is expected to hurt JPMorgan’s overall earnings for the second quarter, which ends June 30. Dimon apologized for the losses, which he said occurred since the first quarter, which ended March 31.
Did you catch that? They may have lost well over $2 billion dollars â€“ but itâ€™s okay, they are very â€œsorry.â€
The problem is that many Americans still have the wool over their eyes and continue to trust Wall Street to manage their hard-earned assets. Let this recent JP Morgan fiasco serve as a wake-up call. You canâ€™t trust Wall Street to manage your wealth responsibly. If youâ€™re tired of losses, volatility, and dealing with Wall Street firms that donâ€™t have your interests in mind, contact us today to see if a Personal Protected Pension Planâ„¢ is right for you.
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