Executive Intelligence Review
Subscribe to EIR


Could JP Morgan Chase
Be on the Hook for $30 Billion?

May 22, 2012 (EIRNS)—The extent of the losses from the infamous London office derivatives trade by JP Morgan Chase keep rising, and are presently mooted to be in the range of $6-7 billion. But that surely isn't the whole story.

For example, the behemoth announced May 21 that it would not pursue either the dividend increase or the $15 billion stock buyback which CEO Jamie Dimon had announced with such pizazz in March, right after the banks' latest stress tests by the Federal Reserve. The Fed has now told Morgan to abandon its plans to disperse capital, and conserve it instead.

It is, of course, absurd to suggest that the biggest and "best-capitalized" U.S. bank could be facing the chance of failure or a huge bailout—or is it? The website zerohedge.com examined the Federal Reserve's report on the last stress test of JP Morgan Chase, to see if there might be a worst-case "red line" there, at which the Fed would surely order Morgan to conserve capital. Zerohedge.com found that there was a suggestion of such a red line—at a potential for loss (for all potential securities/counterparty losses combined) of about $30 billion.