On Thursday J.P. Morgan Chase's CEO Jamie Dimon announced after hours that the bank had sustained a $2 billion in losses in the past six weeks and could lose another billion.
The cause? Bad derivatives bets from the bank's Chief Investment Office that manages risk. The "synthetic hedge" was made by London-based trader Bruno Michel Iksil.
J.P. Morgan Chase and Mr. Dimon have been regarded as the Wall Street gold standard, having weathered the financial crisis better than the other financial entities. During Thursday's conference call Mr. Dimon said a review was taking place,, stating "We will admit it, we will fix it and move on, This trading violates the Dimon principle."
Let's hope so. Mr. Dimon, along with his peers, have been critical of the Dodd-Frank legislation as onerous to their operations. However, if heads don't roll, markets dip and public confidence is shaken again, it will be difficult to fend off calls for more "reforms".
Fool us once, but not again. Conservatives will be watching for the J.P. Morgan Chastening.