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JPMorgan: Trading Loss Grows To $4.4 Billion

RENEE MONTAGNE, HOST:

The largest bank in the U.S., JPMorgan Chase, this morning released its second quarter results. It's net income was $5 billion, but it turns out that loses in a failed hedging strategy involving a secretive trader were much higher than what the bank originally said the loss would be. In fact, JPMorgan lost $4.4 billion last quarter on those risky trades.

As NPR's Yuki Noguchi reports, that's not the full extent of the firm's damage.

YUKI NOGUCHI, BYLINE: In addition to the $4.4 billion loss, JPMorgan restated its first quarter results to reflect some additional losses. The bank said that was the result of shady accounting by some traders in its chief investment office, trying to potentially mask their losses.

That had JPMorgan CEO Jamie Dimon on an investor conference call this morning, once again, striking an apologetic tone.

(SOUNDBITE OF INVESTOR CONFERENCE CALL)

JAMIE DIMON: I Tell you (technical difficulty) believe in generally and conservative accounting principles. We don't like to deceive ourselves about whether their earning money or not. And, obviously, this thing is also a little bit of an exception there.

NOGUCHI: In total so far this year, those controversial trading losses come to $5.8 billion, nearly three times what JPMorgan initially projected when it first announced its problems in May. Several top executives and traders from the chief investment office have lost their jobs.

(SOUNDBITE OF INVESTOR CONFERENCE CALL)

DIMON: We are not proud this moment, but we are proud of our company. We're not making light of this error, but we do think it's an isolated event. One of the reasons you do hold capital is for known and unknown events. Obviously, this one we shot ourselves in the foot.

NOGUCHI: The trading losses are particularly embarrassing for JPMorgan, which was once a model of risk management. For one, the bank had been one of the more vocal critics against new regulations that would restrict firms making risky trades with their own capital. Also, the bank has now drawn scrutiny from the Department of Justice and the Securities and Exchange Commission, which are investigating its trading losses.

JPMorgan shares have lost more than 16 percent of their value since the trading losses were first announced May 10th. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

Renee Montagne, one of the best-known names in public radio, is a special correspondent and host for NPR News.
Yuki Noguchi is a correspondent on the Business Desk based out of NPR's headquarters in Washington, DC. Since joining NPR in 2008, she's covered a range of business and economic news, with a special focus on the workplace — anything that affects how and why we work. In recent years she has covered the rise of the contract workforce, the #MeToo movement, the Great Recession, and the subprime housing crisis. In 2011, she covered the earthquake and tsunami in her parents' native Japan. Her coverage of the impact of opioids on workers and their families won a 2019 Gracie Award and received First Place and Best In Show in the radio category from the National Headliner Awards. She also loves featuring offbeat topics, and has eaten insects in service of journalism.
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