Top JP Morgan Exec Resigns: More Massive Losses Announced
JP Morgan's co-Chief Operating Officer. Frank Bisignano is resigning. This follows more losses from last year's derivative trade gone bad.
Because the announcement was made over the weekend, it indicates it was something JPM wanting to tone down - which naturally means it's actually a much bigger deal than the reporting would lead us to believe.
Originally trade losses were said to be about $1 billion. Then it was upped to $2 billion. After that, reporting on the matter died to a trickle. But here we see that losses are now believed to top $6.2 billion. That's an increase of over 300% from the $2 billion that was announced a year ago. That's a lot of money, even for a TBTF bank.
The temptation here might be to somehow minimize even a loss of $6 billion+, since we're talking about one of the world's biggest banks. But a quick look at the numbers doesn't allow for such minimizing. Total revenue in 2011, right before the losses from this trade were discovered, were a hair less than $100 billion ($99.8). So simple math tells us the $6.2 billion represents about 6.2% of total revenue - from one trade. So I really don't think the use of the term "massive" applied to these losses is exaggerated.
No wonder the announcement was reserved for the weekend when no one is paying much attention.
By the way, you may have noticed that that Bisignano is going to become CEO of a company named First Data, located in Atlanta. But if this was simply a case where a top exec was leaving JPM to pursue a better opportunity, it wouldn't have been announced on a Sunday. Sunday announcements happen because a company wants to perform some form of damage-control.
Of course, the bigger story is one we tried to outline when the bad trade was discovered last year. (Click HERE for that.)
Because the announcement was made over the weekend, it indicates it was something JPM wanting to tone down - which naturally means it's actually a much bigger deal than the reporting would lead us to believe.
Originally trade losses were said to be about $1 billion. Then it was upped to $2 billion. After that, reporting on the matter died to a trickle. But here we see that losses are now believed to top $6.2 billion. That's an increase of over 300% from the $2 billion that was announced a year ago. That's a lot of money, even for a TBTF bank.
The temptation here might be to somehow minimize even a loss of $6 billion+, since we're talking about one of the world's biggest banks. But a quick look at the numbers doesn't allow for such minimizing. Total revenue in 2011, right before the losses from this trade were discovered, were a hair less than $100 billion ($99.8). So simple math tells us the $6.2 billion represents about 6.2% of total revenue - from one trade. So I really don't think the use of the term "massive" applied to these losses is exaggerated.
No wonder the announcement was reserved for the weekend when no one is paying much attention.
By the way, you may have noticed that that Bisignano is going to become CEO of a company named First Data, located in Atlanta. But if this was simply a case where a top exec was leaving JPM to pursue a better opportunity, it wouldn't have been announced on a Sunday. Sunday announcements happen because a company wants to perform some form of damage-control.
Of course, the bigger story is one we tried to outline when the bad trade was discovered last year. (Click HERE for that.)
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