Careers

04:21 PM
Phil Albinus
Phil Albinus
Commentary
Connect Directly
Twitter
RSS
E-Mail
50%
50%

Bad Betting Admissions Wrap Up Rough Week for Investing World

JPMorgan Chase had to admit that their Bad Bet was now a $5 billion debacle, ending a week of negative news for the investing world.

This was a rough week for the world of investing. At the start of the week, a modestly successful broker in Iowa botched a suicide attempt as his firm was found to have misused client cash to the tune of $200 million. These may not be MF Global or Bernie Madoff numbers but this is big for the Midwest where this man was the pillar of his community. At the close of this week, A different pillar showed much larger cracks as the leaders at JPMorgan Chase had to admit that their Bad Bet was now a $5 billion debacle.

They probably miss the good ol' days when the London Whale’s hedge was just a modest $2 billion loss.

While there has always been risky behavior and outright fraud in capital markets - read The Coffee Trader for details about how dangerous life was around the exchanges in the Netherlands in the 1600s - this news fails to phase us Americans. At times, it appears that we consider that this is the way to do business. Just look across the pond at England where the CEO of Barclays stepped down for allegedly rigging interest rates in the current Libor scandal. Leaving in disgrace is rather classy tradition compared to the bankers in Wall Street who feel no shame in pushing rules to the limit and not raising an eyebrow when their banks crash and burn. Look at pictures of the bank CEOs who have appeared before the media and the Congress - are they repentant or more annoyed at having to explain themselves?

Critics of the banks believe that more regulation as necessary but the banks have their doubts, naturally. Granted the laws have been passed but the details remain to be hashed out - and other questions remain. Namely, can regulators realistically enforce the Volcker Rule? Many of these issues need to get settled, as well as the global fight over HFT and its impact on FX. Further, we are seeing the further consolidation of exchanges - something that has stalled in the early days of the recession - but we are seeing some signs of life as Canada’s exchange operator TMX takes aim at Direct Edge.

Have a nice, cool and blessedly undramatic weekend -- see you on Monday.

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio
Comment  | 
Print  | 
More Insights
More Commentary
Is There a Watson in Your Financial Future?
How artificial intelligence might affect financial services.
Survey Shows an Urgency to Automate the Back Office
Confluence reports numbers are trending up across the board when discussing the need to automate back-office processes.
7 Pillars of Market Surveillance 2.0
Compliance officers are facing flash crashes, insider trading, market manipulation, and more. Here are seven market surveillance and risk management steps that will help compliance officers sleep better at night.
Stop, Rethink & Recalibrate: A View From Asia Pacific
Technology has made the human element of high- and low-touch trading almost indistinguishable. Brokers can no longer compete on price. Instead, they should build toward user experience and value of outcome.
The Sentient Enterprise: Data Driven as a Strategy, Not a Tactic
Can capital markets take a tip from front-to-back-office customer execution efficiencies and apply it to the investment process?
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - Elite 8, October 2014
The in-depth profiles of this year's Elite 8 honorees focus on leadership, talent recruitment, big data, analytics, mobile, and more.
Video
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.