Daily News: May 11, 2012

JPMorgan Loses $2 Billion on Risk Unit’s ‘Grievous Mistakes’

Bloomberg reported that in a conference call with investors after the market closed, JPMorgan Chase CEO Jamie Dimon said the firm suffered a $2 billion trading loss after an “egregious” failure in a unit managing risks, jeopardizing Wall Street banks’ efforts to loosen a federal ban on bets with their own money.

According to Bloomberg, the firm’s chief investment office, run by Ina Drew, took flawed positions on synthetic credit securities that remain volatile and may cost an additional $1 billion this quarter or next, Dimon told analysts. Losses mounted as JPMorgan tried to mitigate transactions designed to hedge credit exposure. “There were many errors, sloppiness and bad judgment,” Dimon said. “These were grievous mistakes, they were self-inflicted.”

To read the full text of the Bloomberg story, click here.