JP Morgan's London Whale is now a rotting carcass

I am so loving this unfolding story. I think this is the first time I have ever heard the arrogant prick Jamie Dimon ever admit to a mistake. As reported on this blog on April 17 JP Morgan's "London Whale" was beached and stuck in his trades. Well it seems a few weeks, even in the British sunlight, have resulted in him rotting and the stench has gotten so bad that even Jamie has had to acknowledge that his hedge does stink.

By Scott Reckard, Andrew Tangel and Walter Hamilton, Los Angeles Times May 10, 2012, 5:56 p.m.

Original source

Barely four years after Wall Street's wrong-way bets plunged the world into a financial crisis, JPMorgan Chase & Co. admitted it lost $2 billion from a trading portfolio that was supposed to have helped the bank manage credit risk.

"These were egregious mistakes," said Chief Executive Jamie Dimon, who is considered one of the world's savviest bankers. "We have egg on our face, and we deserve any criticism we get."

The announcement stunned the financial industry, in part because it came from such a highly regarded bank. Dimon had navigated JPMorgan through the crisis in good shape by clamping down on some of the excessive risks that torpedoed rivals.

Dimon told analysts that the bank racked up $2 billion in trading losses during the last six weeks, and that could "easily get worse." He said JPMorgan could suffer an additional $1-billion loss from the portfolio during the second quarter.

"My jaw is on the table," said Nancy Bush of SNL Financial. "I never expected this right now — not in a million years."

The losses stemmed from derivative bets that backfired in the company's Chief Investment Office. This part of the bank was in charge of trading to balance the company's assets and liabilities, although it had been criticized by some analysts for operating more like a hedge fund.

There had been media reports that a single JPMorgan trader in Europe, known in the bond market as "the London whale," was making massive bets that were influencing prices in the $10-trillion market.

Investors bailed out of JPMorgan stock in after-hours trading, a sign it will open sharply lower in New York on Friday. The stock fell 6%, and rivals such as Citigroup Inc., Wells Fargo & Co., andBank of America Corp. also posted modest declines.

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