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- JPMorgan deals reportedly backfired causing losses to mount
JPMorgan Chase's $2 billion loss had its roots in efforts to shield the bank from Europe's economic meltdown. However, instead of shrinking risk exposure, the complicated deals backfired, and losses mounted -- as much as $200 million a day in late April and early May, sources said. U.S. and U.K. regulators are investigating what went wrong and whether the bank should have come forward with the bad news sooner. Meanwhile, JPMorgan CEO Jamie Dimon said executives were "completely wrong" in public statements last month regarding the derivatives trades. The Wall Street Journal
(5/13), Reuters
(5/13),  MSNBC
(5/13)      
- Analysis: Loss may be an issue for Romney camp
Mitt Romney, the presumptive Republican nominee for president, has said he is eager to discuss the economy, including his bid to repeal the Dodd-Frank Act, but JPMorgan Chase's announcement that it has lost about $2 billion on derivatives trades has created something of an issue for the Romney camp. A spokeswoman for Romney said the loss shows "the importance of oversight and transparency in the derivatives market." Romney would seek "common-sense regulation that gives regulators tools to do their jobs and that gives investors more clarity" if he is elected president, the spokeswoman wrote in an e-mail. Detroit Free Press
(5/12), Bloomberg
(5/14)
- Commentary: Loss highlights flaws in Fed's approach to bank capital
Simon Johnson writes that the $2 billion trading loss suffered by JPMorgan Chase reveals concerns about banks' risk-management efforts, and that it raises questions about the Federal Reserve. "But the real losers in this turn of events are the Board of Governors of the Federal Reserve System and the New York Fed, whose approach to bank capital is now demonstrated to be deeply flawed," Johnson writes. The Huffington Post
(5/11)
| Industry Update | | |
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- Regulators shouldn't try to shrink money fund sector, Schapiro says
Mary Schapiro, chairwoman of the Securities and Exchange Commission, said regulators shouldn't try to shrink the money-market mutual fund industry. "It’s not for the government to say," Schapiro said at an industry conference. "They should be the size they should be. I want them to be resilient. I want them to be reflective of the fact that they are investment products and their value does indeed fluctuate." But Schapiro is still looking into proposing new rules for the sector. Bloomberg
(5/11)
- Analysis: Effort to minimize systemic risk faces hurdles
The idea of minimizing systemic risk in the financial sector is simple, but implementing rules remains controversial and challenging. Regulators are striving to tackle systemic risk by limiting single-counterparty exposure. However, the industry has questions about the proposal. "The demand instead is for a system that keeps disasters at bay through wise rules and prudent supervision," according to this unbylined analysis. "But the torrent of criticism still raises an awkward question: why should anyone believe regulators are wiser than markets?" The Economist
(5/12)
| New York Focus | | |
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- Merrill Lynch buys Maiden Lane III CDOs from New York Fed
Merrill Lynch won a competitive bidding process to purchase TRIAXX collateralized debt obligations from the New York Federal Reserve. The CDOs were part of the Maiden Lane III portfolio that the government assumed through its rescue of AIG. "The winning bids, which were materially higher than the original prices ML III paid, demonstrate continued interest in these assets and represent good value for the public," New York Fed President William Dudley said. Reuters
(5/10)
| Career Development | | |
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- Leaders should concern themselves with good analytics
Analytics is a necessarily broad term, with many departments supplying and analyzing that information, writes Chris Petersen. That's why it's essential that C-suite leaders provide focus and vision. "The best analytics is not a random search to find a golden nugget. They should be driven by business questions focused on trade-off decisions that can be made to optimize results that count," Petersen writes. SmartBrief/SmartBlog on Leadership
(5/10)
| People & Personalities | | |
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- Analysis: JPMorgan loss diminishes Dimon's credibility
Jamie Dimon, CEO at JPMorgan Chase, has earned considerable clout in the financial services industry and beyond largely due to his bank's reputation as a stable force during the global financial crisis. But the announcement that JPMorgan lost at least $2 billion through trading has hit the CEO's credibility. "The argument that financial institutions do not need the new rules to help them avoid the irresponsible actions that led to the crisis of 2008 is at least $2 billion harder to make today," said Rep. Barney Frank, D-Mass. Reuters
(5/11), The New York Times (tiered subscription model)/DealBook blog
(5/11)
| On The Economy | | |
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- Survey: Economists expect U.S. growth to be subdued
Economists polled by The Wall Street Journal said they expect growth in the U.S. to be slow, yet steady, this year. Gross domestic product is expected to remain below 3% but expand faster than the 2.2% pace in the first quarter. Also, most respondents said they expect their forecasts will likely be too optimistic. The Wall Street Journal
(5/14)
| Financial Products | | |
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- Credit Suisse bolsters mutual fund offerings
Credit Suisse's asset-management division rolled out a mutual fund that strives to offer returns similar to those of hedge funds. "For investors seeking to enhance the efficiency of their portfolios, we believe the Credit Suisse Liquid Alternative Fund may provide a liquid alternative for accessing the risk and return characteristics of hedge funds without the structural impediments of limited partnerships," said Jordan Drachman, head of research for alternative beta strategies. Hedgeweek (London)
(5/14), Banking-Business-Review.com
(5/11)
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