JPMorgan Chase & Co. (NYSE: JPM) is an American multinational banking corporation of securities, investments and retail. It is the largest bank in the United States by assets and market capitalization. It … see full wiki
Before I begin this review, let's state it for record that I don't own any shares in JP Morgan, have no business interest in it, nor do I do any banking transactions with the commercial institution. I do have a cousin who works in it!
So, why am I interested in it? Well, because of its recent week trading loss of US$2 billion!
$2 billion is not a small sum to anyone, not even Mark Zuckerberg; even if this is one of the biggest financial institutions in the world. Not to mention this loss is chalked up by a single department, probably by less than a handful of people too! Imagine for a sec, how long it would take to earn a profit of $2 billion or even revenue!
Facebook was listed last friday on Nasdaq. It was tauted as an incredible IPO which makes Mark Zuckerberg a $20 billion man! Now, everyone in the world know Mark Zuckerberg and Facebook. It's a company with lots of talents but not the necessary earnings to warrant its listing share price of some US$38. That's something to discuss later. It's now trading around $33!!!
For now though, Mark Zuckerberg made less than $2 billion a year. Even with some 800+ million friends and after some 9 years of hard work, he has a networth of US$20 billion as of last Friday.
Let's give it some perspective, shall we? Mark Zuckerberg = $20 billion.
JP Morgan trading loss in a week = $2 billion and adding by the minutes as this review is being penned. Dimon is in the rough! He claimed it's a stupid mistake and an oversight (his, for sure! and regulators, etc...).Those are my words. You get the gist of it. The reporter at Huff Post Business reported it as "risky and legally questionable trading" (Richard (RJ) Eskow in JP Morgan Chase: Break up the big banks now. Here's How).
Now, this Memorial Monday, it's reported in Huffington Post as well as London Evening Standard that the losses will escalate to some $7 billion! JPMorgan's net income in 2011 is around US$18.9 billion. That took some 260,000 employees around the world to make it in a year! Some jokers lost a tenth of that (possibly more) in a week?! Stunning?!!!
If you're not, then you should be. JPMorgan Chase was unscathed when other financial institutions were seeking out bailouts during the 2008 financial crisis that rocked the entire world and most of us are still left with feeling the aftershocks. A friend of mine has ended his life partly because of the reckless activities of these so called bankers. Mind you, they are bankers, not loan sharks. Or, are they???
Regulators should seriously look into these organizations. Granted, the shareholders are the ones having the right to question the management. And, what business is it for us individuals? Well, I'd be thinking a lot more of it if I were banking with these banks. Also, beware, retail investors, you're swimming with the sharks!!! As for taxpayers, good luck to you (again!) if these institutions should pose systemic risks to the financial system globally again! As if Greece isn't problematic enough!!! *sigh...*
It's not just Dimon in the rough! The sea is rough!!!