FBI Director Robert Muller said the bureau has opened a preliminary investigation into a major JPMorgan Chase trading loss.
"All I can say is that we have opened a preliminary investigation," Robert Mueller said in response to questions at an FBI oversight hearing on Capitol Hill.
The loss, while massive on the face of it, is expected to be easily absorbed by JPMorgan, which is the nation's largest bank by assets. Even this quarter, the bank is expected to turn a multi-billion dollar profit.
The group that suffered the losses is part of the bank's so-called corporate unit, and had been making trades designed to hedge against risk, which is a fancy way of saying it operates as a kind of insurance agency, CNNMoney.com reported. When a big bet is made, the office tries to find ways to mitigate the risk to the bank should the bet go south.
Over the past few months, the unit has staked out a very large position in insurance-like bets called credit default swaps, the same type of instrument that caused so much havoc in 2008.
CEO Jamie Dimon, who on Monday a $23 million compensation package approved, told analysts and reporters the losses were caused by "errors," "sloppiness" and "bad judgment."
In the wake of the financial crisis, critics have made the case that the biggest banks are still so large, so complex, and their desire for profits so great that they remain a systemic risk to the global financial system.
Dimon, in full damage control mode, was forced to hold a hastily-arranged conference call to announce the loss, and followed that with an appearance on Meet the Press, where he admitted the company had made a mistake.
"This is a terrible mistake," Dimon said. "In this job, you hope they're small and few and far between. This one is far too big."
Read more on JPMorgan:
CNNMoney.com: How JPMorgan made its $2B blunder
CNNMoney.com: Betting against JPMorgan
Fortune: The hedge funds that are profiting off JPMorgan's bad trade
READ FULL CNNMONEY.COM STORY
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Even then I wonder if heads would really roll. Oversight is needed on Wall Street as we have been shown time & again.
Did the compensation package approve the CEO? If not, there's some shenanigans going on in the last sentence/paragraph.
I think they're trying to present the article in some sort of proper English grammar. And, if that is the case, they need to add some more th's to the end of a lot of those words.
Also, this is why I decided against doing work for Chase. It's sad that people will lose jobs over this because yet another person that works at a bank got his or her job because they played golf with the right people.
we'll be lucky to get "water downed " oversight dodd-frank is stiill in review and may never see the light day. ditto for the vollcker act and its its implementation. . great to see what tons of money from wall street and the banks can buy!!
"FBI opens investigation into JPMorgan trade loss" ... why is my tax money going to something like this?? What a waste!!!! What will be the outcome of this, besides absolutely nothing???
Such a joke !!!!!
I'm sure on top of the private loss that only affects most likely wealthy investors in JP Morgan, we'll now have 10's of millions, maybe 100's of millions in FBI investigation costs that now go on the taxpayers dime. It serves the political grandstand well.
So, what about John Corzine and MG Global? Oh that's right. He's an Obama butt sniffer who brings in the cashe for the Forward and Downward effort.
And then TSA makes the headlines and it's paraded on Andersons for some mere what was it $160 mil?
@jim
You are not that off the mark. I agree.
Why would the FBI get involved? The sheeple stockholders rolled over and gave this guy the OK.
Why doesn't the FBI investigate Obama for the massive losses he caused taxpayers with loans to solar firms he was told would fail? Obama has made the US Government look a 1000 times dumber than Chase. Why doesn't the media tell the truth about Obama's economic, business incompetence – or CORRUPTION?
The FBI is investigating that. Don't you read the news?
Does anyone proofread articles anymore? Nice engrish.
Why is the FBI investigating and not the SEC? Or is investigation by the SEC just a joke?
Let the paper shredding begin!
Why the FBI? The SEC would be the logical agency to investigate this-but maybe JPMC has bribed them?
Excellent question. Why aren't the journalists asking the same question?
Talk about sloppiness and errors - who wrote this story? The company made "a suprise announce"? And hastily-arranged is not hyphenated.
So, I can only assume most of the facts in this story are as sloppy as the writing/editing.
JP Morgan is a private company. They answer to their investors and account holders. $2B sounds like a lot but they deal in hundreds of billions. This is just more administration grandstanding and getting government involved where it doesn't belong. Investments are gambles by their nature. The government can't provide guaranteed investments. Sad to know valuable FBI resources will be wasted on investigating how an investment manage did a bad job.