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Home Publications Blogs Beat the Press How Much Do You Get Paid to Lose $6.2 Billion?

How Much Do You Get Paid to Lose $6.2 Billion?

Wednesday, 16 January 2013 07:56

The answer is $11.5 million, at least if you work at J.P. Morgan. That is what Jamie Dimon took home last year according to the WSJ. This was half of his prior year's take, apparently this is the punishment for allowing his London Whale crew to engage in risky trading that cost the bank $6.2 billion.

Comments (3)Add Comment
written by Chris, January 16, 2013 7:42
With boards like these he might well have been paid more if he had lost more. You know, like 15 million if he lost 10 billion.
2012 profits $21 B...up 10% from 2011...
written by pete, January 16, 2013 2:09
So, probably there were a lot of bets which lost money, and clearly many more which made money. That's the nature of the game. And this was a year when private money, hedge funds, etc., did horrible. Indeed, one would say in spite of a silly bet on Europe, the bank did great. And Dimon went after those traders and unlike the federal government is actually clawing back bonuses. Lets not forget thankfully-former Senator Dodd inserting bonus protection into a bailout bill. Ignoring that one bet, sort of pro forma, profits would be $27B...wow! Anyway at least he is not the guy who called treasury to have them launder the money through AIG to save his bank.

Dimon could have realistically attributed the loss to chance
written by John Wright, January 16, 2013 9:22
While I doubt if Dimon wanted to use this defense, as it would undercut his message that he now has it under control, he could have said that proprietary trading is a two party zero sum game, and one party can reliably make net money only by reliably finding suitable uninformed/foolish counterparties (see AIG CDS of 2006) or having superior insight or information (perhaps illegal inside information), in a world where information flows quickly, if not openly.

But I doubt if Dimon would use this "We were unlucky" explanation as it would call into question the entire proprietary trading operation at his and other TBTF banks.

And who were the fortunate counterparties of the 6.2Billion loss?

They probably received big, and unreported to the media, bonuses.

And there was no news media suggestion to break off investment banking for the TBTF institutions after this loss.

The loss was an accounting loss/gain as books were balanced on both sides of the trade.

No bridges fell down, no homes were destroyed, but the overinvestment and USA subsidy of the financial industry continues.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.