Did J.P. Morgan and Jamie Dimon take honesty too far?O
Back in April when rumour of's massive exposure to credit indices first surfaced, Jamie Dimon dismissed it as a "tempest in a teapot". Barely a month later Dimon went public and announced a $2 billion loss on the gigantic positions.
This was brazen honesty in an industry renowned for its secrecy and desire to hide losses. The question is, did Jamie Dimon make things worse forby going on record about the losses so early?
There is rumour today thathas sold off the majority of it's position in the credit indices but with the financial media tracking virtually every movement in the credit indices, hedge funds have been relentless in blowing out the spreads to move against and causing the firm more pain.
In recent weeks, the bank has divested itself of 65 to 70 percent of its holdings in a credit, or bond, derivative index known as the CDX IG 9, which tracks a certain cross-section of corporate debt instruments. The position played a major role in whathas estimated to be at least $2 billion in losses, a figure bank chief Jamie Dimon first acknowledged publicly on May 10.
Dimon has taken pains to conceal the details of the trade in hopes of making’s exit from the positions smoother. Still, some of the Whale’s positions have been widely reported, and as a result, say credit traders, inhospitable market conditions may have ballooned the bank’s eventual losses to as great as $5 billion.
If Dimon had been more secretive and not announced anything, sure it would have been a nasty shock in the next quarterly reports but the overall losses would most likely have been lower than they are now (CNBC reports up to $5 billion, other sources claim up to $8 billion).