JPMorgan Chase CEO Jamie Dimon admitted on Sunday that a $2 billion loss on derivatives trades had jeopardised the bank's credibility and given regulators a new opportunity to target Wall Street.
Dimon told NBC's "Meet the Press," program that the big loss incurred by the New York-based bank, which triggered a slide in banking shares on Friday, was hugely damaging, but not bad enough to stop the company making a profit.
Asked if the losses would give fresh ammunition to regulators to clamp down on Wall Street four years after the US government bailed out several banks during the financial crisis of 2008, Dimon replied: "Yes, absolutely. This is a very unfortunate and inopportune time to have had this kind of mistake."
But he denied that the unexpected losses from a hedging scheme designed to lower investment risk - but which instead backfired spectacularly - had placed the company in jeopardy, although unwanted ramifications could follow.
"It's a question of size. This is not a risk that is life-threatening to J. P Morgan," said Dimon, who late Thursday told analysts that the loss could increase to $3 billion through the end of June due to market volatility.
"This is a stupid thing that we should never have done, but we're still going to earn a lot of money this quarter. So, it isn't like the company is jeopardised.
"We hurt ourselves and our credibility yes, and we've got to fully expect and pay the price for that." The interview with Dimon was conducted Friday after J. P Morgan shares closed down 9.3 percent, wiping $14 billion off the market value of the banking giant.
The shock loss came over the past six weeks in the New York bank's risk management unit, the Chief Investment Office, and involved trading in credit default swaps, a so-called "synthetic hedge." The losses are a humiliation for Dimon - one of Wall Street's best known titans - and for the bank, after it proudly came through the 2008 financial crisis in far better shape than its rivals.
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