Wednesday, June 13, 2012

Jamie Dimon says that traders took risk they didn't understand

According to a Bloomberg article, JP Morgan CEO Jamie Dimon says that the $2 billion loss on credit default swap trades was the result of traders taking risk that they didn't understand.

The only way to prevent this from occurring in the future is to require JP Morgan and other banks to disclose on an ongoing basis their current asset, liability and off-balance sheet exposure details.

With this data, the market can see what positions each bank is taking and exert discipline so the banks do not take positions they do not understand in size again.

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