There's been a lot of talk lately about the losses incurred by JPMorgan. What exactly happened?
Bruno Iksil, a trader employed by JPMorgan in its London office, placed large bets on the health of bonds issued by large corporations. In essence, Iksil wagered on the proposition that "investment grade" bonds issued by companies like CBS and Freddie Mac would never default, by issuing credit default swaps and selling them to rival financial institutions. These swaps would only pay off in the event of a default in the underlying bonds.
The sheer size of Iksil's bets led market participants to dub him the "London whale."
Was that name engineered so that comedy writers could make Fail Whale jokes in the event the bets turned out poorly for JPMorgan?
Are these questions really asked frequently?
Okay. These bets were a worse kept secret than the fact that Secret Service agents like hookers. In fact, they weren't secret at all. So why is this news now?
Tags: JPMorgan Chase, Money, Wall Street