Some more information has come to light on the more than $7 billion “Whale Trade” derivative losses at JP Morgan—that total being comprised of an amount of over $6 billion in losses on the trade and a further amount of almost $1 billion in fines.
In an article on Bloomberg entitled JP Morgan’s Biggest Mistake, author William D Cohan provides us with somewhat of an insider’s overview on the problems that led to the Whale Trade losses—his sister-in-law sat on the Audit Committee. This article summarises some of Cohan’s main points and identifies the lessons that auditors and other risk professionals should be learning in order to avoid making similar mistakes. Continue reading
Posted in Banking, Business
Tagged Audit, auditor, Bloomberg, Culture, Derivatives, JP Morgan, Management, pricing, Risk, traders, valuation, Values, Whale Trade
Warren Buffet has called the Federal Reserve, the US central bank, “The Greatest Hedge Fund In History”. That is because the Fed as it is commonly known has persisted in printing money and buying $85 billion in bonds each month in order to artificially support the US and by extension the global financial markets.
This is quite possibly the recipe for another financial disaster. Continue reading
Posted in Banking, Business, History
Tagged asset prices, bonds, Credit, Federal Reserve, Financial Crisis, financial markets, hedge fund, housing, inflation, Paradigm, Quantitative Easing, stocks, Subprime, Warren Buffet
The above entitled article on Reuters was written by Bethany McLean, one of the authors of the book “The Smartest Guys In The Room”, which eventually became an Academy Award nominated documentary about the wiles of Enron.
The article makes for exceptional reading and is a must for those involved with the banking industry and especially those involved in risk, audit, finance and compliance. I highly recommend it to all. Please use the link below to access it.
The top five unlearned lessons of the financial crisis
Are we on the verge of another financial crisis?
It is a question well worth asking as the prices of stocks and property have been sky high by central bankers flooding the markets with cheap money.
What should risk professionals do?
The first question for risk managers, internal auditors and finance professionals is; how much of the cheap and plentiful liquidity provided by Quantitative Easing, or QE as it is known, has gone into inflating asset prices—stocks, bonds and housing?
The second question is: how far will asset prices fall when the Fed and the Bank of England start to “taper” or reduce their QE and how will that impact my institution? Continue reading
Posted in Banking, Business
Tagged asset price, Audit, Bernanke, bonds, economy, Federal Reserve, Financial Crisis, India, Rajan, Risk, stocks, Subprime, Summers, Yellen
There are several lessons that one should learn from the current crisis in Syria in terms of history, geopolitical strategy and the balance of powers.
America Has Always Been Reluctant To Engage In Foreign Wars
America has always been reluctant to engage in foreign wars. They waited virtually until the last minute to enter World War I and were literally forced into World War II by the actions of Japan at Pearl Harbour. As such, the current reluctance to engage in Syria is nothing new. However, the ghost of the Iraq War does play a major role in this new found affinity for non-intervention. Continue reading
Posted in History, Politics
Tagged AIPAC, America, Assad, Congress, Iraq, Israel, Israeli Lobby, Kerry, Military, Munich, Obama, President, Syria, war
This is the fourth in a series of articles on Human Risk. The first three can be found here, here and here.
Microsoft CEO Steve Ballmer, who took over from Bill Gates in 2000, recently announced that he will be resigning within 12 months. The fact that Microsoft’s shares jumped almost 8% on the news is testament to the widely held belief that Ballmer is primarily responsible for the decline of Microsoft relative to its much nimbler rivals such as Google and Apple.
By some estimates as much as $24 billion was added to the market value of Microsoft on Ballmer’s announcement. This is proof, if ever any was needed, that culture and risk are twin sides of the same coin. The only question is; what if any, were the specific cultural issues that caused one of the most important organisations in modern history to decline in value and competitiveness? Continue reading
Posted in Banking, Business, People
Tagged Apple, Ballmer, Banks, CEO, competitiveness, Culture, Financial Crisis, Google, HR, human risk, IBM, Microsoft, Organisation, Risk, teamwork