Hey, Wall Street? Chicken Little called. She says you need to stop overreacting to JPMorgan Chase's $2 billion trading loss. I mean, it's not as if the sky were falling. For a bank this big, $2 billion? It's practically rounding error.
JPMorgan Chase's rapid $2 billion trading loss reportedly involved credit default swaps -- the same investments that played such a large role in the financial crisis. Here's why credit default swaps still pose such a threat to the U.S. economy.
JPMorgan Chase stock lost more than 8% of its value Friday after the bank, the largest in the United States, revealed a monster $2 billion loss in a trading group that manages the risks the bank takes with its own money.
This week, the government took a big first step toward shutting down the Can't Lose Room in the Wall Street Casino. It's now one comment period away from enacting the Volcker Rule, which limits the kinds of risky investments banks can make with money insured by the U.S. taxpayer.
Citigroup is closing another one of its proprietary trading groups as it and other banks prepare to comply with the Volcker Rule, which will reduce the exposure of lenders to risky trading activities. What the move will mean for financial giant's profit margins, and its stock price.
The theme for Thursday is big players adjusting to a changing world: Citigroup is shutting down a major hedge fund it used for soon-to-be-banned proprietary trading, Goldman has been subpoenaed over its role in the subprime mortgage crisis, and OPEC is thinking that it might need to pump more oil.
Paul Volcker, chairman of the Economic Recovery Advisory Board for President Barack Obama, is set to step down from the position next month. As a key adviser to the president, Volcker has advocated for tougher financial regulations and counseled the government on fiscal policy.
Investment banks are working around new regulations restricting them from putting their own capital into short-term investments: The Wall Street institutions are sidestepping the Volcker Rule by making direct purchases of securities, companies and properties, which are considered longer-term investments.
Since Lehman's collapse in September 2008, regulators around the world have begun erecting a scaffolding of new rules and regulations designed limit excessive risk-taking. The big question is: Are they enough to prevent another financial crisis?
JP Morgan Chase & Co. will shut down its proprietary commodities trading division in an effort to comply with recent federal regulations related to investment banking, Bloomberg News reported, citing a person familiar with the process that it didn't identify.
Banking giant Goldman Sachs is reportedly planning to spin off its proprietary trading unit due to concerns over compliance with the Volcker rule contained in recently passed financial reform legislation.
Some top financial institutions are moving surprisingly quickly to change how they operate. Question is: Did the financial reform law force their hands, or is this just a good time for big banks to rethink their business?
Winthrop Brown, a Washington lawyer who lobbies on behalf of financial services firms, says the new regulations should get "a pretty good grade" from Wall Street -- and from Main Street. But will they prevent another economic meltdown?
The bill's limits on hedge fund and private equity investments could force Goldman to divest billions in assets, which would lower its earnings. However, the bill also lets banks stretch out their compliance with the new rules by several years, postponing the pain.
Some pros are aiming straight at the eye of the financial hurricane, buying into the besieged banks. Here's why: The uncertainty threatening them has dissipated, and banks will now start looking for new ways to profit from the new rules.