Sunday, April 15, 2012

Former Execs: JPMorgan Chase Gambling Even More Heavily On High-Risk Derivatives ... At Jamie Dimon's Direction

Posted: 14 Apr 2012 12:00 PM PDT

What on earth could possibly go wrong with one of the world's largest banks betting heavily on high-risk derivatives? Originally, that was supposed to be banned under Dodd Frank with the Volcker Rule. But lobbyists made sure it was just a hollow joke.

I don't know about you, but I don't want to pay for another round of bailouts for these jerks:
JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon has transformed the bank’s chief investment office in the past five years, increasing the size and risk of its speculative bets, according to five former executives with direct knowledge of the changes.

Achilles Macris, hired in 2006 as the CIO’s top executive in London, led an expansion into corporate and mortgage-debt investments with a mandate to generate profits for the New York-0based bank, three of the former employees said. Dimon, 56, closely supervised the shift from the CIO’s previous focus on protecting JPMorgan from risks inherent in its banking business, such as interest-rate and currency movements, they said.

Some of Macris’s bets are now so large that JPMorgan probably can’t unwind them without losing money or roiling financial markets, the former executives said, based on knowledge gleaned from people inside the bank and dealers at other firms.   READ MORE

1 comment:

  1. Instead of a waivable binary Volcker Rule, they should use a Taylor-like Rule that changes with leverage squared, volatility and inversely GNP (the SDE is (L-1) dr + L d var). A numerical rule is harder to waive, and can fit into Basel regulations for risk capital.

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