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
A collection of articles defining our times. The pages contain clickable links, don't let the titles fool you, some of the best articles have very non-descript titles and there are usually more articles on the matters in the days and week pages the links land on so it's a sort of treasure hunt through history, Enjoy!
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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