May 11, 2012 – All that Glitters is not Diamonds in $700 Trillion Derivatives Market: A massive trading bet boomeranged on J.P. Morgan Chase JPM +0.25%& Co., leaving the bank with at least $2 billion in trading losses and its chief executive, James Dimon, with a rare black eye following a long run as what some called the “King of Wall Street.”
The bank, betting on a continued economic recovery with a complex web of trades tied to the values of corporate bonds, was hit hard when prices moved against it starting last month, causing losses in many of its derivatives positions. The losses occurred while J.P. Morgan tried to scale back that trade.
“This is yet another example of the need for the more than $700 trillion derivatives market to be brought into the light of financial regulation,” said Dennis Kelleher, president of Better Markets, a liberal nonprofit focused on financial reform. Follow the link for the complete story, interactive graphics, videos, comments and additional links.
The Master of Disaster