IDEAS home Printed from https://ideas.repec.org/h/wsi/wschap/9789814663267_0017.html
   My bibliography  Save this book chapter

Jp Morgan Chase London Whale

In: GLOBAL DERIVATIVE DEBACLES From Theory to Malpractice

Author

Listed:
  • Laurent L Jacque

Abstract

On July 13, 2012 JP Morgan Chase & Co announced a stunning trading loss of $5.9 billion which wiped out more than $25 billion of the bank's market capitalization. The losses originated from the bank's Synthetic Credit Portfolio (SCP) which is itself part of the Chief Investment Office (CIO). This derivative debacle represented a significant misstep — if not an outright stumble — for JP Morgan Chase Chairman and CEO Jamie Dimon. Once vaunted for his risk management prowess in steering the bank deftly through the subprime crisis, Dimon was generally regarded as one of the most steadfast and savvy chieftains of the banking world. How did JP Morgan allow what began as a benign effort at hedging the bank portfolio to morph into a mammoth position in the credit market — which nicknamed it half-mockingly as the “London Whale”? Was it a deliberate attempt by the bank to bypass the Volcker rule in the new Dodd-Frank Act? How could JP Morgan Chase, which decades earlier had pioneered the new Value-a-Risk (V@R) metrics and was known for its expertise in risk management, seem so dysfunctional in taming its synthetic portfolio? How did a savvy giant banking institution allow the “London Whale” to be savagely harpooned by hedge funds?

Suggested Citation

  • Laurent L Jacque, 2015. "Jp Morgan Chase London Whale," World Scientific Book Chapters, in: GLOBAL DERIVATIVE DEBACLES From Theory to Malpractice, chapter 17, pages 285-307, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814663267_0017
    as

    Download full text from publisher

    File URL: https://www.worldscientific.com/doi/pdf/10.1142/9789814663267_0017
    Download Restriction: Ebook Access is available upon purchase.
    File URL: https://www.worldscientific.com/doi/abs/10.1142/9789814663267_0017
    Download Restriction: Ebook Access is available upon purchase.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:wschap:9789814663267_0017. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscientific.com/page/worldscibooks .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.