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FBN's Charlie Gasparino and Liz MacDonald weigh in on J.P. Morgan's $2 billion trading loss.
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Percent over the next hour we'll have complete coverage of the announcement from JPMorgan Chase.
Would be with fox business's Liz MacDonald and joining me by phone fox business's senior correspondent Charlie Gasparino Charlie -- -- you first you actually spoke to Jamie Dimon what they tell you.
Yeah I mean I every conversation with the to go.
Listen to what I like about him and the -- -- any other -- -- street -- where eight.
The united depressed you know stops when -- on the pedals well.
Upstream -- -- in this and that I mean you know maybe I'm guilty of that because I find -- to be refreshingly.
Try and that's essentially what he what -- -- -- we screwed up.
There's -- group in London.
-- treat it would -- bad -- sit -- it wasn't the trade itself -- really caused it you know the sort of trait that beat it will.
It was that it -- -- -- a stuff that they thought was gonna mitigate loss victim made great debt situation.
Really -- Arm which supported out and and it should come as it takes to get a bit -- -- money.
If they put -- equity treasury -- is what happened interest rates while the price goes out and it was a lot of money.
-- just the nature banks.
Problem one thing I don't think Jamie will back away from this is where -- and I disagree.
-- on the notion of having all these big banks consolidating all this all the financial power.
You know it -- -- JPMorgan at the top of that because they do all the trade in the lots of risk they do lots of the -- -- lend again.
He won't back off of that and I told -- -- right that's that's where I think they're weak link is.
Worried are pretty -- this is a management issue someone screwed up and out of -- and it does.
-- how many sound tonight and he sound confident Diddy -- Like he was under pressure.
Not happy about helicopter and they wanted to could think that -- the very well run bank.
Arm Liz and it's but it's -- more there's no doubt -- -- people don't let our nation -- you know outlook the EP.
Prepared to a twelve month B.
Onslaught about his reputation.
That up and -- -- -- you know he's pretty -- -- but you know I think they've identified a problem.
Up you think about it you know these -- at a scary is that we have the last couple weeks fresh -- -- exactly been the most -- billion dollars but you think about it.
Eight copper lost.
-- what are the best traders in a world but I never know beast Greenberg over Bear Stearns now which that we gadget or as portfolio manager broker.
-- to talk about you know which would happen to retreat to really get bad is when you don't know what to cut it lost and I think you know at some point.
And this process they had a tree that was going -- Put it -- it was a work.
What we're working -- -- -- -- -- -- a quarter and maybe they would have compacted bureau or breakeven.
He didn't -- -- you know what let's make it happen now it's let's get behind -- Well -- would turn to list Mac Donald.
-- in the a lot of -- tonight coming out that I know a lot of people out there -- -- what in the heck does this mean the problem was in what they called synthetic credit portfolio.
Mentions of derivatives.
Where people to make of these investments.
What are they have they -- -- -- sound kind of spooky right and they're the same investments that were behind the downfall of eight companies like AIG.
And they were basically cause a lot of turmoil -- the financial collapse of 2008.
When I've spoken with people market regulators that places like market by the depositary trust clearing their that this is the gang this is the -- the -- these -- officials who oversees the clearing of these trades.
And what I'm hearing this is that this.
But desk at JPMorgan.
Got so big that they were basically.
Warping this the directions of the derivatives market.
At that big guy who's running the deaths had such influence these sort of -- could be -- to have Ben Bernanke could influence the treasury market so.
When you look at what was going on behind the scenes there was turmoil turmoil on this test this sentiment was protect at -- -- -- that the credit of a number of companies their bonds would improve when they didn't that there is -- one thing that is happening behind the scenes so.
Certainly Europe -- here for a second guess I'm still confused about what they were actually investing in Charlie do you have any insight because it -- They would do it at a trade -- why would it be their -- should be put on.
Which -- and it seems surveys they used.
Primarily Q&A critic price is thick -- -- bad -- basically mitigated losses under book you know they had the right -- And it had it -- -- but it -- known as credit default swaps to be.
If you start of conflicts no personal debt it's he's very -- policies on -- And armed -- -- it people to trade on.
And then they put these -- bet that didn't work obviously.
Up markets pretty bulk -- or cricket they're talking -- and irritable and and it but they -- with the sort of hedging strategy about credit default swaps.
And made it worse I would say that we talked about.
-- seven impact -- not.
Derivatives to quality derivatives are very big retreat these are not liquid market so one treat one big retreat could skew -- market.
Such as it is between port guy's gonna help but you don't -- it back exactly but I don't -- the Dow Jones Industrial Average here.
Are so yes there's some.
PR industry.
You know Charlie I think I just think I just don't think we're gonna have and I could be wrong I've been wrong before.
By some sort of mix of market repercussions.
Are now massive market repercussions.
But let me ask you that's -- and and you are seeing the praises of Jamie Dimon as a leader right.
Lot of people are saying this is a big black -- for him he is the -- CEO I don't street here's a guy who -- the Dow.
Makes them money and -- we look -- us.
I don't know it actually cheapest easiest shot the world OK true screw up -- -- -- -- -- -- -- -- -- -- -- -- -- Made a mistake we don't just say in this -- -- you know where I come out these guys these guys.
I'd be worried and -- and they don't like -- was -- -- say about by the big average break about but I would say it is.
A bank in any bank would -- well having.
People.
UK.
Who knows can meet with what is really doing right now I will tell you really behind the scenes among bank in the banking industry.
And among adults covered it's an investors -- -- Jamie Dimon makes the -- you know -- What else going on -- -- group at Bank of America.
Little -- what.
Yeah.
Reality it or don't write on the conference call had gotten a -- students with Bank of America -- how difficult how easy will it be feud.
-- bank to exit this -- and Jamie Dimon still wouldn't answer the issue is though that we've got the vocal rule we have Dodd-Frank that's coming into play this summer you know.
The question is -- Jamie Dimon he's been saying I am unwinding my prop trading desk.
This treasury desk is used to hedge -- and protect.
Our balance sheet but was it turns into a profit center.
You know he call on the first quarter or earnings call he said.
-- -- -- about the London -- moving the markets it's all a tempest in a teapot and now is coming out saying this was flawed it was poorly -- people who don't you don't I don't poorly monitored.
Poor oversight so you know -- changing dialogue going on behind the scenes.
Which went public Morgan chase and I know Jamie Dimon has been the standard -- For the virtues of banking and -- -- money is also climbing -- the evils of regulation.
And this to bring DCT coming on his door step even and more quickly Charlie.
Actually I would trade it I would say -- -- -- JPMorgan every -- this year's.
Probably it was never big into prop trading should also point out at every bank has an investment portfolio.
OK if they have billions of dollars that they have to but he used some -- It would be -- -- -- that she is a trade.
They do stocks.
They aren't they're hedging their book bit broader book of business because this -- a bank that does and resilient say.
Okay now.
Is.
I Greek debt bill will be rebuke Coles put a vocal rule making it even though there's probably is -- to do with the -- Tomorrow what we wake up we will hear.
Every democratic house member a member on the house but it serves committee talk about the -- there -- no doubt that we need to make strong.
Well let's make no mistake about it.
Thanks are in the business.
Of taking risk and -- hedging their bets.
Taking -- -- -- balance sheet that's what they do the bigger the bank the more they gonna do that more risk it is just.
If you really want a deal of this got to make banks.
There is no yeah.
There's no doubt that calls for heavy regulated more regulation.
-- are going to be sound.
