RENEE MONTAGNE, HOST:
The largest bank in the U.S., JPMorgan Chase, this morning released its second quarter results. It's net income was $5 billion, but it turns out that loses in a failed hedging strategy involving a secretive trader were much higher than what the bank originally said the loss would be. In fact, JPMorgan lost $4.4 billion last quarter on those risky trades.
As NPR's Yuki Noguchi reports, that's not the full extent of the firm's damage.
YUKI NOGUCHI, BYLINE: In addition to the $4.4 billion loss, JPMorgan restated its first quarter results to reflect some additional losses. The bank said that was the result of shady accounting by some traders in its chief investment office, trying to potentially mask their losses.
That had JPMorgan CEO Jamie Dimon on an investor conference call this morning, once again, striking an apologetic tone.
(SOUNDBITE OF INVESTOR CONFERENCE CALL)
JAMIE DIMON: I Tell you (technical difficulty) believe in generally and conservative accounting principles. We don't like to deceive ourselves about whether their earning money or not. And, obviously, this thing is also a little bit of an exception there.
NOGUCHI: In total so far this year, those controversial trading losses come to $5.8 billion, nearly three times what JPMorgan initially projected when it first announced its problems in May. Several top executives and traders from the chief investment office have lost their jobs.
(SOUNDBITE OF INVESTOR CONFERENCE CALL)
DIMON: We are not proud this moment, but we are proud of our company. We're not making light of this error, but we do think it's an isolated event. One of the reasons you do hold capital is for known and unknown events. Obviously, this one we shot ourselves in the foot.
NOGUCHI: The trading losses are particularly embarrassing for JPMorgan, which was once a model of risk management. For one, the bank had been one of the more vocal critics against new regulations that would restrict firms making risky trades with their own capital. Also, the bank has now drawn scrutiny from the Department of Justice and the Securities and Exchange Commission, which are investigating its trading losses.
JPMorgan shares have lost more than 16 percent of their value since the trading losses were first announced May 10th. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
