Related articles .. link .. Banks hit by JPMorgan; Wall Street ends week lower and .. link .. JPMorgan chief Jamie Dimon blasts governments for 'making the recovery worse' ... (Hegelian Dialectic)
May 11, 2012
Fitch downgrades JP Morgan Chase
The closing bell brought no relief for JPMorgan Chase on Friday, as a major credit rating agency moved to downgrade its debt almost exactly 24 hours after the bank revealed a $2 billion trading loss.
Fitch Ratings downgraded both JPMorgan's short-term and long-term debt, with the latter falling to A+ from AA-. The bank, the country's largest by assets, was also placed on ratings watch negative.
Fitch said it views the $2 billion loss as "manageable" but added that "the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity."
"It also raises questions regarding JPM's risk appetite, risk management framework, practices and oversight," the agency said.
The downgrade is a reaction to news that came via a hastily arranged conference call after the market close on Thursday, when CEO Jamie Dimon revealed that the bank had suffered $2 billion in losses over the past six weeks.
The unit that suffered the losses is part of the bank's so-called corporate unit, and had been making trades designed to hedge against risk.
Net losses, after factoring in other securities gains, are expected to exceed $800 million by the end of the second quarter. And losses could increase depending on market conditions and the bank's actions moving forward.
The unit had been expected to post a net gain of $200 million.
Shares of JPMorgan (JPM, Fortune 500), which dropped 9% during the day Friday, continued to slide after hours, with shares falling another 1%.
read full article @ source
