JPMorgan Chase disclosed Thursday that a trading group had suffered "significant" losses in a portfolio of credit investments, with chief executive Jamie Dimon estimating losses at $2 billion.
"These were egregious mistakes," Dimon said on the call. "They were self-inflicted, and this is not how we want to run a business."
The troubles at the unit, the so-called Chief Investment Office that makes trades to balance the bank's assets and liabilities, are expected to weigh on the bank's broader earnings.
For example, the corporate group, which includes the Chief Investment Office, is now expected to lose $800 million in the second quarter, the company said in the filing. Previously, JPMorgan had estimated that the group would report net income of roughly $200 million.
Ultimately, JPMorgan said the final tally will depend on the markets and other actions by the bank. Dimon added that it could "easily get worse."
The trading group has been a focus in recent weeks as questions surfaced about big bets the JPMorgan unit was reportedly making in credit default swaps. Reports emerged in April about a JPMorgan trader in London whose positions were so big that they were distorting the market.
Dimon played down the significance. In a conference call April 13, he called it "a complete tempest in a teapot."
"Every bank has a major portfolio. In those portfolios, you make investments that you think are wise to offset your exposures," Dimon said on the April call.
"At the end of the day, that is our job to invest that portfolio wisely, intelligently over a long period of time to earn income and to offset other exposures that we have."
Now, the portfolio is wreaking havoc at the bank. In its filing Thursday, JPMorgan pointed specifically to problems with its bets on credit.
"We have egg on our face," Dimon said Thursday. "We deserve any criticism we get."