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IMO, the LATimes writer is a moron, more intent on trying to sell papers and grab eyeballs than to adequately explain the situation.
JPM was attempting to hedge some of their corporate banking risk - they lend to THOUSANDS of companies world wide and proper risk management dictates that they take steps to mitiigage some of that risk. Clearly the hedge didn't work quite the way they thought it would.
While $2BN isn't a small number, it needs to be looked at in the context of the size of the overall enterprise.
Further, politicians claiming that this loss now justifies further regulation to protect the taxpayer and the financial system is just plain hooey. If the regulators/regulations were so good, how come the government's stress tests didn't pick up on the hedge as a problem. Politicians don't have a clue and regulators even less so.
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