Canaccord Genuity Morning Coffee on JP Morgan (JPM); Makes the Cam Neely Trade Look Okay

May 18, 2012 10:23 AM EDT Send to a Friend
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Canaccord Genuity Morning Coffee on JP Morgan (NYSE: JPM); Makes the Cam Neely trade look okay.

The New York Times is reporting that JP Morgan’s trading losses have increased by at least 50% in recent days, topping the $3-billion mark according to sources close to the matter. A $2-billion loss was initially reported last week and the losses have increased rapidly as hedge funds and other investors are taking advantage of JP Morgan’s distress, resulting in a faster deterioration in the bank’s underlying credit market positions according to the report. A spokeswoman for the bank declined to comment on the article, and CEO Jamie Dimon had said earlier that the total amount of the loss would be volatile based on daily market fluctuations. Separately, U.S. government officials are seeking to ensure a tough interpretation of regulation designed to prevent banks from making bets with their own money. The “Volcker rule” seeks to prevent these transactions, and White House and Treasury officials are still trying to determine if JP Morgan’s trading loss could have been avoided had the rules been in place, according to sources close to the matter. The Volker rule would allow trades made by banks to hedge risk, but would restrict those that are for profit. Those who support the rule say it would make the banking system safer, while those who oppose it say it is difficult to determine which trades are made for profit as opposed to hedging and that it would be too restrictive for banks.


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