CEO Jamie Dimon estimated the losses in the company's portfolio of investments at $2 billion. The stock is down more than 5 percent in after-hours trading. "These were egregious mistakes," Dimon said in an unscheduled conference call. "They were self-inflicted and this is not how we want to run a business." These are stunning comments from any chief executive, much less one who has generally managed to remain above the banking industry fray. From DealBook:
The trading group has been the focus of scrutiny in recent weeks as questions surfaced about big bets the JPMorgan unit was reportedly making in credit default swaps. Reports emerged in April about a JPMorgan trader in London whose positions were so big that they were distorting the market. Mr. Dimon played down the significance. In a conference call on April 13, he called it "a complete tempest in a teapot." "Every bank has a major portfolio. In those portfolios you make investments that you think are wise to offset your exposures," Mr. Dimon said on the April call.
"This portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed," the New York-based company said today in a quarterly securities filing. JPMorgan declined 5.5 percent to $38.50 in extended trading at 4:51 p.m. in New York. JPMorgan's chief investment office has been transformed in recent years under Chief Executive Officer Jamie Dimon into a unit that makes bigger and riskier speculative bets with the bank's money, five former employees of the bank said earlier this year. Some of the bets were so big that the bank probably couldn't unwind them without losing money or roiling financial markets, the former executives said. Dimon said last month that the bank is "very conservative" in investing the firm's excess cash.