For the last month or so, everyone wishes they had been a fly on the wall in JP Morgan’s Chief Investment Office in London.And by everyone we mean journalists, hedge funders, politicians… everyone.
You see, the question everyone is asking is — how… how did JP Morgan lose $2 billion hedging? Ans also, of course, what were the traders (etc.) thinking?
We know that the massive loss was due to a bad hedge and bad risk management, but that’s vague. During his hearing today, though, Jamie Dimon did mention two specific risks that the CIO was trying to mitigate — rapidly rising interest rates and the global credit crisis.
Something? Nothing? Take it as you will.