Fri July 13, 2012
JPMorgan To Reveal Earnings, Trading Losses
Originally published on Thu August 30, 2012 1:26 pm
RENEE MONTAGNE, HOST:
And the biggest bank in the U.S., JPMorgan Chase, says it has lost $4.4 billion from its failed hedging strategy involving a secretive trader. That's more than twice the bank's earlier estimate. The company released its second-quarter earnings report this morning, and NPR's Jim Zarroli is with us now to talk about them. Jim, what is the company telling investors this morning about that money?
JIM ZARROLI, BYLINE: Well, the bank says - you know - it made money overall during the quarter, but there were these losses. And the interesting thing this morning is, the bank said it has discovered information about the integrity of its trader marks. And it says certain individuals may have been seeking to avoid showing the full amount of the losses incurred in the first quarter. So this goes well beyond what have they have said so far, about the losses.
You remember when the reports first came out that there were these hedging losses, JPMorgan CEO Jamie Dimon said it was a tempest in a teapot. Then he came out and said - you know - there were serious losses; we should have done better. Now, they're actually saying there may have been a deliberate misrepresentation on the part of the firm's chief investment office, where these trades were made. And that could be a real legal headache for the company. It's already under investigation by several regulatory agencies; it faces lawsuits. So this doesn't help their position.
MONTAGNE: What is JPMorgan Chase saying about how it will avoid these losses in the future?
ZARROLI: Well, they are - they say they are taking steps to significantly reduce risk in the chief investment office; and it will go back to what it is supposed to be - which is, you know, a unit that invests the bank's money in the most conservative way. The bank is having a conference call, a two-hour conference call with analysts this morning. It just got under way.
One of the other things they're expected to talk about is this issue of clawbacks. In other words, the company says it's going to reclaim some of the compensation it paid to the traders - to the traders and the executives who were responsible for overseeing the unit. So we may hear more about that.
MONTAGNE: OK. Thanks very much, Jim. That is NPR's Jim Zarroli. Transcript provided by NPR, Copyright National Public Radio.