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JPMorgan Chase & Co. Message Board

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  • onedge953 onedge953 May 16, 2012 3:25 PM Flag

    FBI probe?

    Even experts are baffled.



    OCC's Curry: Regulators Working To Define Hedging

    Last Update: 5/16/2012 3:23:13 PM

    --



    By Maya Jackson Randall
    Of DOW JONES NEWSWIRES


    WASHINGTON (Dow Jones)--A top U.S. banking official Wednesday said regulators are
    working to define hedging, a key term in Washington this week amid questions
    about whether J.P. Morgan Chase & Co.'s (JPM) more than $2 billion loss was the
    result of a move to hedge against losses or a bet aimed at generating big
    profits.

    "That's something that we are working on," said Comptroller of the Currency
    Thomas J. Curry, noting that the definition should be hashed out as regulators
    finalize the "Volcker rule," which aims to limit bank risk-taking. The rule,
    which stems from the 2010 Dodd-Frank law, would prohibit banks from making bets
    with their own money but allow some form of hedging against losses.

    Without weighing in specifically on J.P. Morgan Chase's case, Curry noted that
    federal officials will be discussing "in great detail" the difference between
    pure balance sheet hedging transactions and risky bets made to generate large
    profits.

    Curry's comments to bankers at the Exchequer Club in Washington came as J.P.
    Morgan's trading losses raise questions about whether the bank's trades would be
    permitted under the Volcker rule. Critics point to the size and complexity of the
    trades as a sign that the bank was seeking to generate profits rather than simply
    protecting its portfolio.

    Still, J.P. Morgan has said the losses occurred in a portfolio designed to "hedge
    the firm's overall credit exposure."

    Earlier this week, the OCC said it was reviewing the trading loss but said it is
    unclear whether those trades would have violated a proposed ban on banks' trading
    with their own funds. The agency also said it was evaluating how other large
    banks manage their risks.

    -By Maya Jackson Randall, Dow Jones Newswires; 202-862-6687,
    maya.jackson-randall@dowjones.com

    --Alan Zibel contributed to this report.

    (END) Dow Jones Newswires

    May 16, 2012 15:23 ET (19:23 GMT)

 
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