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When a Bank Loses Billions, Who Wins?

President and CEO of JPMorgan Chase Co. Jamie Dimon testifies before a Senate Banking Committee hearing in June. The committee was hearing testimony from Dimon on how JPMorgan Chase lost billions in stock market trades. Photo by Mark Wilson/Getty Images.

Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Wednesday’s query:

Name: Hill Kemp

Question: When Morgan Stanley loses $7 billion, does that money just disappear into the ether or does some other party(s) make $7 billion?

Making Sense

Paul Solman: I’m not sure if you mean JPMorgan Chase instead of Morgan Stanley. Before the 1930s, they were the same firm, but the Banking Act of 1933, often referred to as “Glass-Steagall” after its congressional sponsors, effectively hived off investment banking from commercial — deposit — banking in order to limit risk. Thus the two “Morgans.”

Moreover, if you mean JPMorgan/Chase, then the total amount of its recent loss is reported to be $5.8 billion and falling dominoes.

As usual, look for a second post early Wednesday afternoon. And please don’t blame us if events or technology overtake us. This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions

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