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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Now why exactly is the FBI getting involved ? What laws are alleged to have been broken ? Is this a political stunt by the government ? Is this a foreshadowing of the type of purges and investigations performed in Soviet era Russia or current era China ?
I thought America was a place where political use of law was not condoned. Hmmmm.
If you're serious in your belief that this investigation is the harbinger of a communist-type dictatorship, then I'd like a lot of what you're smoking please. One of the biggest banks takes a multi-billion dollar loss – the same type that got us started on a roller coaster in 2008 – and you think an investigation isn't in order? Someone has to watch these people in order that their desire for profit doesn't bankrupt the nation as a whole.
FBI investigates to see if any law is broken. How would FBI know if any law is broken without investigation?
How, Misha, do you propose you identify if a law was broken without an investigation?
Are these the same FBI agents that are supposedly invesigating the Trayvon Martin case looking for a civil rights violation? The Justice department is so blatantly political under Holder that it's laughable.
"The Justice department is so blatantly political under Holder that it's laughable."
UUUUUUUUUUUUUHHHHHHHHHHHHHH, "blatantly political"??? Alberto Gonzales and Harriet Miers ring a bell? Seriously, get a clue.
Yeah. Same exact ones. They have pretty full plates. Shanequa and Devhan.
I'm sure that this is no major concern...JP Morgan Chase will just find ways to up fees to their customers and get it all back within a month or two.
Then their customers can vote with their funds and take them elsewhere. They don't need an FBI investigation to do that.
Agreed! That was one of my thoughts when I initially heard about this on the news. They will just charge the loss to their customers. Soon people will go back to saving money under their mattresses.
Why does Mitt Romney have his staff bring young boys to his hotel room late at night?
To protect them from Barney Frank?
what about the massive lost on C (Citigroup)... I lost so much money. Where is the investigation in to that?
R– you won't get any $$$ from Citigroup unless your Barney Frank or Chis Dodd's relative..
Let me get this straight.. It's a big election year.. A "too big to fail" bank did wrong yet again.. Politicians take lots of money from banks, and/or sit on their board.. Politicians want votes from people who are getting screwed by banks.. Idea: Dog & Pony show to make public think politicians actually care about them.. This bogus investigation will result in a couple of people being let go with severance packages larger than the average Joe earns in a lifetime..
Is Eric planning to walk lots of tax payer money across to the banks and then charge them with a white collar crime? Oh wait him and his Boss and moron W Bush already have done that but let them keep it.
The approval rating of Congress is at an all-time low.
This low rating our Congress now has–and the low regard the American people have for our politicians–is fitting and well deserved. After all they have sworn to serve the people who elected them, yet they serve the interests of the lobbyists.
Yeah, right. Everyone knows JPM can break as many laws as they want and just pay off congressmen.
@Kimberlee.. read your FDIC regulations.. this was JP Morgan's OWN money.. not yours, not the taxpayers, not the government... it would be like going to a casino, putting down a $1K bet and losing.... then the FBI would investigate you? We should spend more time investigating all of the Big Zero's Big Government waste GSA, TSA, ICE – the section chief in El Paso has a Jordanian Dimplomatic Passport – wth?) ... we could really use the FBI to investigate all those REAL crimes.. not the fact that captialism works
I think I agree with Neil Cavuto on his show last night. When will the FBI start an investigation into the 15 trillion dollars of debt our government has gotten us into and yet seems oblivious to it and has every intention of increasing that amount significantly. 2 Billion? Geez! I guess our elected officials have nothing better to do that go after the splinter at JP Morgan when they have a tree sticking in them! The ultimate hyprocrisy if you ask me.
AMEN Steve.. AMEN...
VIOLENCE
otherwise the rich will just say "FINE, you dont wanna play??? we'll just pack up the fun & move it away where YOURE NOT INVITED...!!!!"
I am no expert on Financial Regulation like Dodd-Frank, but can someone explain to me what JPM Chase did that was so illegal? As far as I can tell, they didn't touch retail deposits, and this was just an investment gone wrong. The only people it affects are shareholders, and that seems like fair-game to me. What am I missing?
Why is the government involved? JPMorgan is not a publicly owned company....besides, the government loses billion every month and I dont see anyone probing them
Look up JPM on NYSE.
Thinking that this investigation will accomplish anything is like believing that the popular vote can elect a president...