Who Benefited from JP Morgan’s Losses?
JPMorgan Chase World Headquarters on Park Avenue in New York City. Photo by Timothy A. Clary/AFP/Getty Images.
Paul Solman answers questions from the NewsHour audience on business and economic news here on his Making Sen$e page. Here is Tuesday’s query:
M. John Matlaw: So if JP Morgan Chase lost a bundle, who did they lose it to? Who’s two or three or four or five billion dollars richer because of JP Morgan Chase’s losing bet?
Paul Solman: The so-called “counterparties.” That is, the institutions they bet with. We don’t know who they are yet, and may never know. Hell, we don’t even know what bets the bank lost its money on.
I understand the need to report the facts as best one understands them, as quickly as possible, but let me quote Doug Dachille, the man who used to run JP Morgan’s Proprietary Trading desk. I wrote to him perplexedly after having read numerous accounts of the bets in the NYT, WSJ and elsewhere, each of which contradicted the others in significant ways.
“Using only publicly available financial statements,” Dachille wrote back, “even an experienced veteran of banking and fixed income trading, like myself, who has a deep understanding of bank accounting and who ran Proprietary Trading and Derivative businesses, cannot understand what is going on and what the risk exposures of the organization are.”
Neither, it seems, could its CEO, Jamie Dimon.