'London Whale' Sinks XLF

May 10, 2012 5:55 PM EDT
In a surprise conference call, JPMorgan Chase & Co. (NYSE: JPM) announced that it made egregious mistakes in managing its investments.

Efforts by bank employees to hedge the credit portfolio have blown up in their face, and managers were forced to announce today that they have a net $800 million loss on synthetic credit investments. CEO Jamie Dimon warned that the losses could get worse later this quarter and volatility will be high for the rest of the year.

In a conference call, Dimon begrudgingly confirmed previous reports that the losses were tied to the "London Whale", a trader named Bruno Iksil who has been know to take positions as large as $100 Billion.

When analysts asked Diamond if other banks had similar exposure to the synthetic credit market he said, "Just cus' we're stupid . . . I don't know what everyone else does."

JPMorgan is down 5% after-hours, while the Financial Select Sector SPDR (NYSE: XLF) is down 2%.

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