Data Management

10:25 AM
Phil Albinus
Phil Albinus
Commentary
Connect Directly
Twitter
RSS
E-Mail
50%
50%

Dimon's $2 Billion Bet Proves the Volcker Rule

As Wall Street firms were making a case against Dodd-Frank and The Volcker Rule, JPMorgan loses big on a prop trading bet that blew up in their face.

Jamie Dimon just handed regulators and legislators one more reason to continue with the Volcker Rule. And it only cost him $2 billion.

The CEO of JPMorgan Chase had to call in a bet from one of his top traders - known as the London Whale - for a spectacular bet on credit default swap indexes that went terribly wrong. Not only is the current loss $2 billion but there could be further fallout of $1 billion if, as one commentator says, "the market does not cooperate."

This comes at a terrible time as Wall Street firms try to restore their image and make the case that they are responsible and trustworthy entities. After bringing the global market to near collapse in 2008, accepting taxpayer bailouts and rewarding themselves with bonuses for their brazen behavior, it's clear that very few lessons have been learned.

For every business and conservative commentator who calls the president an anti-capitalism socialist, it doesn't help your argument when you look like an out-of-control gambler betting the farm and the kids' college funds on a scheme that has everyone shaking their heads.

Read Heidi Moore's excellent primer on what went wrong at Dimon's gambling parlor.

JPMorgan and the rest of Wall Street had better hope that this bet doesn't trigger any blowback. And if they thought that their efforts to stop Dodd-Frank and the Volcker Rule were a no-brainer, think again. They clearly have a lot to learn.

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
A Wild Ride Comes to an End
Covering the financial services technology space for the past 15 years has been a thrilling ride with many ups as downs.
The End of an Era: Farewell to an Icon
After more than two decades of writing for Wall Street & Technology, I am leaving the media brand. It's time to reflect on our mutual history and the road ahead.
Beyond Bitcoin: Why Counterparty Has Won Support From Overstock's Chairman
The combined excitement over the currency and the Blockchain has kept the market capitalization above $4 billion for more than a year. This has attracted both imitators and innovators.
Asset Managers Set Sights on Defragmenting Back-Office Data
Defragmenting back-office data and technology will be a top focus for asset managers in 2015.
4 Mobile Security Predictions for 2015
As we look ahead, mobility is the perfect breeding ground for attacks in 2015.
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
5 Things to Look For Before Accepting Terms & Conditions
5 Things to Look For Before Accepting Terms & Conditions
Is your corporate data at risk? Before uploading sensitive information to cloud services be sure to review these terms.