Tag Archives: credit derivatives

JP Morgan Whale Trade Investigation

 It would seem that the authorities are taking a very close look ay JP Morgan’s $6.2 billionn derivative loss. The issue appears to be that pressure was placed on the trader to mismark the portfolio and the risk and pricing parameters adjusted accordingly. The folowing article from Bloomberg outlines the issues: London Whale Resurfaces in Potential US JP Morgan Case.

However, the article from the website Zero Hedge is a bit more detailed. It includes references to to the Congressional report on JP Morgan and why the bank may have been in breach of the Volcker rule.

Jonathan Ledwidge is the author of the book Clearing The Bull, The Financial Crisis And Why Banks Need A Human Transformation (iUniverse).

TBTF Means TBTM (Too Big To Manage) Part II

Banks that are too big to fail or TBTF are by definition also too big to manage or TBTM. In Part II of the series we look at the role played by the growth of products and markets in this phenomenon. Part I can be found here.

What is it about the industry that makes banks so susceptible to becoming TBTM or too big to manage? As noted in Part I, egos and megalomania do play a significant part. However, they are definitely not the whole story.

For many bankers, performance is synonymous with size. Bankers take it as gospel that the greater their share of a particular product market, the greater the profits to be earned from that market. It is obvious that such a proposition does not necessarily hold true.

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