Wednesday, 19 August 2009 01:00

Additional bi-directional option strategy analysis

25 comments

  • Comment Link Reggie Middleton Thursday, 20 August 2009 08:33 posted by Reggie Middleton

    I also doubt they are adequately provisioned for their derivatives risk exposure. They have consderably over a trillion dollars in notional outstanding. I know the argument, "its the net exposure that counts". Well, every time you net, you trade market risk for counterparty risk. There is no free lunch. Can you imagine the counterparty and credit risk that JPM must truly have if one were to go through their books? Then you must add in the leverage from the off BS structures.

    I agree with the commenter above. As a matter of fact, I suspect that if JPM was adequately reserved and provisioned for its proper leverage levels and associated risks, it would be technically insolvent. Then again, it is just a suspicion.

    Report
  • Comment Link NDbadger Thursday, 20 August 2009 08:22 posted by NDbadger

    is a little bit better reserved than the others, but I think your basic point is right on. Their loan portfolios aren't that different.

    Report
  • Comment Link NDbadger Thursday, 20 August 2009 07:43 posted by NDbadger

    looks like this one will get hit pretty hard today.

    Report
  • Comment Link shaunsnoll Wednesday, 19 August 2009 16:37 posted by shaunsnoll

    interesting.....

    Report
  • Comment Link RJAP Wednesday, 19 August 2009 12:48 posted by RJAP

    Reggie,

    I am puzzled by why we hear so much about BAC, COF, RF, but not too much about JPM. I now they are different type of monster, but nevertheless I think JPM Morgan in hidding a lot more than other banks are.

    I do remember that JPM did an enormous amount of loan origination compared to others lenders. Even after BAC and WFC got out of the wholesale business, JPM continued providing this service to mortgage brokers, probably taking over the business the other two dropped.
    If I remember correctly, JPM held most of their loans in their portfolio (not sold to investors). So they have a MASSIVE amount of non-performing loans

    I decided to access the Database for my county, and after a quick search I found the following (results not guaranteed):

    Lis Pendens and Floreclosure Recordings YTD:

    BAC: 1,894
    JPM: 2,557

    While I know this is just a tiny subset, and there are other major factors such as exposure in California, and the fact that JP Morgan has the olygarchs behind them,participation in HFT, I still wonder...

    Also, I find interesting that JP Morgan uses a long list of Trusts/Companies, etc to hold title of its loans. Are we trying here to keep something off the books? Here are some of the names they use:

    J P MORGAN MORTGAGE ACQUISITION TRUST 2006 CH2
    J P MORGAN MORTGAGE ACQUISITION TRUST 2007 CH5
    JP MORGAN 2005 ALT1
    JP MORGAN 2006 A3
    JP MORGAN ACCEPTANCE CORP I
    JP MORGAN ACQUISITION TRUST 2006 ACC1
    JP MORGAN CHASE BAN KNA TRU
    JP MORGAN CHASE & CO
    JP MORGAN MORTGAGE ACQUISITION CORP
    JP MORGAN MORTGAGE ACQUISITION CORP 2005 OPT2

    and many more.

    Somebody with the investigative skills and capabilities should look into this.

    Disclosure: I smell something, so I'm short JPM.

    Report
Login to post comments