JPMorgan, the biggest US bank, has announced billions in losses from disastrous credit bets. It also acknowledged that traders might have tried to conceal the extent of the bad loans earlier this year.
US stocks opened higher on Friday despite the country's largest bank reporting losses from credit bets to the tune of $5.8 billion (4.7 billion euros) this year. In the second quarter of 2012 alone, the lender incurred $4.4 billion in losses.
Markets reacted calmly to the announcement, though, as JPMorgan also posted nearly $5 billion in overall profit for the same period. The Dow Jones, the S&P 500 stock index and the tech-rich NASDAQ all pointed upwards minutes after the opening bell.
JPMorgan disclosed that traders may have misstated the value of their positions, providing the first indication that the problems with the bank's bad deals were the result of more than just poor judgment about markets.
Back to the straight and narrow
International regulators are still investigating the trading mishap, including the Federal Reserve Board, the Securities and Exchange Commission and the UK's Financial Services Authority.
JPMorgan CEO Jamie Dimon told a conference on Friday that the bank had "cleaned up" its chief investment office, which was responsible for disastrous trades, but warned that another $1.7 billion could go down the drain because of the credit bets.
He said the CIO would now focus on conservative investments. "We have put most of this problem behind us, and we can now focus our full energy on what we do best," Dimon said in a statement.
hg/mkg (Reuters, AFP)