Associated Press – 8 hrs ago
NEW YORK (AP) — Shares of JPMorgan Chase & Co. tumbled Thursday as a published report said that the bank’s losses on a bad trade may reach as much as $9 billion — far higher than the estimated $2 billion loss disclosed last month.
In May, JPMorgan said the loss came from trading in credit derivatives designed to hedge against financial risk, not to make a profit for the New York bank.
The New York Times, citing sources it did not identify by name, said that the losses have grown recently as JPMorgan has been unwinding its positions. The newspaper said its sources were current and former traders and executives at JPMorgan, which is the largest bank in the U.S. by assets.
The New York Times story cites an internal report that JPMorgan made in April that showed the losses could reach $8 billion to $9 billion, in a worst-case scenario. But the newspaper added that because JPMorgan has already been unwinding its positions, some expect that the losses will not be more than $6 billion to $7 billion.
A JPMorgan representative declined to comment.
At the time of the loss, JPMorgan CEO Jamie Dimon apologized to shareholders. And just days after the loss was disclosed, Chief Investment Officer Ina Drew left the company. Drew oversaw the trading group responsible for the trade.
JPMorgan has lost about $23 billion in market value since the losses came to light on May 10.
The loss has heightened concerns that the biggest banks still pose risks to the U.S. financial system, less than four years after the financial crisis in the fall of 2008.
In a hearing before the House Financial Services Committee last week, Dimon was dismissive when asked if JPMorgan’s losses could total half a trillion or a trillion dollars. He replied bluntly: “Not unless the Earth is hit by the moon.”
While Dimon avoided putting an exact number on the bank’s trading loss, he did say that JPMorgan will have a solidly profitable quarter. JPMorgan plans to give more details related to its losses when it reports second-quarter earnings on July 13.
The company’s stock dropped $1.55, or 4.2 percent, to $35.23 in afternoon trading. Its shares are down 24 percent since hitting a high of $46.49 in late March.