JPMorgan CEO Jamie Dimon announced that the firm suffered a $2 billion trading loss because of an "egregious" failure in a unit that manages risk.
The firm’s chief investment office, managed by Ina Drew, took flawed positions on volatile synthetic credit securities, which could result in further losses beyond the initial $2 billion. Drew, who according to the Telegraph was paid $14 million last year, is in charge of a trader nicknamed the "London Whale," whose trades are reportedly responsible for the loss.
Dimon said the bank's strategy was "flawed, complex, poorly reviewed, poorly executed, and poorly monitored."
Bank stocks were down after the loss was reported, reflecting investors’ fears that the JP's internal errors would have a broader impact, including amplified calls for breaking up the big banks.
Giant financial firms taking fundamentally flawed positions on volatile securities, and suffering huge financial losses ... didn't we see this movie already?