The shock news this week is that JPMorgan, that mighty institution of financial stability that has steered through this crisis with ease and made Jamie Dimon, its CEO, the sage of finance ā¦ has been rocked by a trading scandal on the scale of a Nick Leeson, Jerome Kerviel and Kweku Adoboli. This time the culprit is Bruno Michel Iksil.
The Financial Services Club's Blog: Drew, Dimon, Volcker and Voldemort
Fwiw, I would put this loss more in the category of Metallgesellschaft than Barings/SG/UBS - ie bad outcomes possible from basis/hedging risk rather than fraud / misrepresentation. Ā JPMorgan has an enormous balance sheet, much of which is not marked-to-market; in the context of the size of their balance sheet $2-3bn is actually not an amazingly large sum...
Don't get me wrong, not saying it is good or even acceptable to drop a few billion on bad hedges - and it would seem pretty clear that they were outsized and badly structured vis the market(s) they were executed in - but wish there was a better understanding of law of big numbers in public discourse around mega-financial institutions. Ā
Might be semantics but think it is important to understand properly why many smaller (banks) are better than fewer big...
