Last week’s revelation by JPMorgan Chase’s CEO Jamie Dimon that the bank’s trading desk has suffered a $2 billion loss was followed on Monday by the resignation of three key players involved in the trade that went bad. The Chief Investment Office (CIO), Ina Drew, along with two of her associates, announced their retirements from the bank.
It was just two months ago that questions about risky trades being undertaken at JPM were passed off by Dimon as a “tempest in a teapot,” but on Sunday, on NBC’s Meet the Press, Dimon admitted that he “was dead wrong” and added:
We made a terrible, egregious mistake. There’s almost no excuse for it. [We] hurt ourselves and our credibility [and expect to] pay the price for that.
Dimon and JPM are used to paying the price for their past errors and misdeeds. In December 2002, the bank paid $80 million as part of a $1.4 billion settlement involving 10 banks that deceived investors with biased research.
In 2003, the bank paid more than $2 billion in fines and settlements to investors and the Securities and Exchange Commission (SEC) for their role in fraudulently financing Enron Corporation that collapsed in 2001.
In March 2005, the bank paid another $2 billion following its involvement in underwriting some $15 billion of WorldCom’s bonds.
There’s more: In November 2009, JPM agreed to a $722 million settlement with the SEC over their involvement in a “pay to play” scheme where Jefferson County, Alabama, was brought to the brink of bankruptcy through fraud and excessive fees to be charged on refinancing the county’s sewer bonds.
And more: In January 2011, JPM admitted that it deliberately overcharged some 6,000 active-duty military families for their mortgages and illegally foreclosed on 18 of those families. At the time Dimon apologized for the “error” and sent one of his associates, chief lending officer Dave Lowman, packing.
Dimon was deliberately opaque in discussing the trade that went sour, saying only that it came from trading in derivatives that were designed to
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