• JPMorgan CEO Jamie Dimon: We were 'dead wrong' to dismiss trading concerns

    By msnbc.com and news services

    UPDATED 5:13 P.M. EDT: Wall Street Journal says three to quit over massive losses

    The CEO of JPMorgan Chase said the bank reacted badly to warning flags last month that it had large trading losses in complex financial derivatives and he was "dead wrong" when he initially dismissed the concerns.

    "We made a terrible, egregious mistake," Jamie Dimon said in an interview broadcast Sunday on NBC's "Meet The Press." "There's almost no excuse for it."

    Dimon said he did not know the extent of the problem when he said in April that the trading concerns were a "tempest in a teapot."

    "I was dead wrong when I said that. I obviously didn't know, 'cause I never would have said that. And one of the reasons we came public was because we wanted to say, "You know what? We told you something that was completely wrong a mere four weeks ago.'"

    On Thursday, the bank disclosed $2 billion in trading losses over the past six weeks. Investors shaved almost 10 percent off JPMorgan's stock price the next day.

     

    "We got very defensive. And people started justifying everything we did,'' Dimon said.

    NYT: JPMorgan lobbied for big loophole on risky trading

    In the interview, Dimon said that while mistakes revealed in the past week were "bad," they did not jeopardize JPMorgan Chase.

    Asked if any laws or Securities and Exchange Commission rules were broken, Dimon responded thatit was too soon to tell.

    "So we've had audit, legal, risk, compliance, some of our best people looking over that. We know we were sloppy. We know we were stupid. We know there was bad judgment. We don't know if any of that's true yet. And of course regulators should look at something like this."

    Dimon told NBC that he supported giving the government the authority to dismantle a failing big bank and wipe out shareholder equity. But he stressed that JPMorgan, the largest bank in the United States, is "very strong."

    He acknowledged the the trading fiasco has given financial regulators more ammunition against the banks.

    "Absolutely. This is a very unfortunate and inopportune time to have had this kind of mistake, yeah."

    Below, Dimon talks about the company's recent $2 billion trading loss with NBC's David Gregory.

    The Associated Press and Reuters contributed to this report.

  • JPMorgan discloses $2B in losses in 'flawed' hedging strategy

    Christopher Whalen, Tangent Capital Partners, discusses what impact JPMorgan's $2 billion trading loss means for other financials.

    By Martin Wolk, NBC News

    JPMorgan Chase, the nation's largest bank, said Thursday it has lost $2 billion in a complex hedging strategy over the past six weeks and could lose more.

    In a conference call to analysts and investors, CEO Jamie Dimon said the 'flawed' hedging strategy was "poorly constructed, poorly reviewed, poorly executed, and poorly monitored."

    As a result, the bank expects to lose $800 million in its corporate segment this quarter, compared with previous estimates that the segment would post $200 million in profit. Some of the hedging losses were offset by taking $1 billion in previously unrealized gains from the bank's portfolio.

    Finbarr O'Reilly / Reuters, file

    Workers erect a sign for JPMorgan Chase in London.

    "The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought," Dimon said in the call, which was monitored by msnbc.com. "There were many errors, sloppiness and bad judgment."

    The company's shares plunged more than 6 percent in late electronic trading after the loss was announced. Other bank stocks, including Citigroup and Bank of America suffered heavy losses as well.

    Dimon said the bank suffered losses as a result of a strategy to hedge against global credit risk. He declined to specify further.

    He said the bank is working through the problems but expects continued volatility, and losses could grow.

    "Hopefully this will not be an issue by the end of the year," he said.

    He said some of the losses were a result of the volatile market environment. Markets have been roiled recently by concerns over Europe, which has slipped back into recession.

    The losses are still a relatively small amount compared to the approximately $200 billion portfolio managed by the company's chief investment office, where the hedging strategy was executed.

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  • Mass. AG sues five major banks over foreclosures

    By Patrick Rizzo

    Massachusetts' top law enforcement official has sued five top U.S. banks, charging they foreclosed illegally on homes in the state and used deceptive loan servicing practices, including robo-signing.

    Attorney General Martha Coakley filed suit against Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and GMAC. 

    “The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis,” Coakley said in a statement.  “Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law. Our action today seeks real accountability for the banks illegal behavior and real relief for homeowners.”

    Coakley's 59-page complaint alleges that the five banks violated Massachusetts law by using fraudulent documentation, including "robo-signing," foreclosing without holding the actual mortgage and failing to uphold loan modification promises to homeowners in the state.

    The 50 state attorneys general had been trying to negotiate a settlement with mortgage lenders over what they said were deceptive practices that helped contribute to the collapse of the housing market. But the talks have been stalled over which practices would be covered by any agreement and how much the banks would pay.

    The talks hit a major roadblock in September when California Attorney General Kamala Harris abandoned the effort, saying the banks weren't offering enough to provide relief for homeowners. Attorneys General in Delaware, Nevada and New York have also expressed reservations about a broad settlement until they can complete a more through investigation of improper mortgage lending practices.

    In April, 2011, the Office of the Comptroller of the Currency, which regulates national banks, issued a report after reviewing foreclosure practices at eight of the largest mortgage servicers. The report cited "inadequate policies, procedures, and independent control infrastructure covering all aspects of the foreclosure process."

    The OCC ordered the companies to take steps to correct "inadequate quality control and audit reviews to ensure compliance with legal requirements, policies and procedures," inadequate organization and staffing, "foreclosure documents ... executed under oath, when no oath was administered," and "notary practices which failed to conform to state legal requirements."  

    “Attorney General Coakley informed me of her decision to file lawsuits against the banks. She also indicated that she’ll evaluate the joint state-federal settlement we’re negotiating, which we hope to reach soon.  Attorney General Coakley indicates that she is open to joining our settlement effort if the terms adequately address the needs of the people of Massachusetts. We’re optimistic that we’ll settle on terms that will be in the interests of Massachusetts,”  Iowa Attorney General Tom Miller said. 

    Wells Fargo CEO John Stumpf told CNBC that despite the lawsuit he still thinks it would be better to come to an agreement with the AGs out of court. "I haven't seen the complaint, but I'm disappointed," he said.

    John Stumpf, the CEO of Wells Fargo, addresses the a new lawsuit by the state of Massachussetts' AG. The firm is one of the banks targeted in the lawsuit.