The embarrassing and costly trade that got JPMorgan CEO Jamie Dimon called before Congress, may actually cost the bank four times more dollars than originally thought. The New York Times reports that a internal estimate of losses from the trades made by "London Whale" Bruno Iskil was projected to be as high as $9 billion, far far higher than $2 billion figure that got everyone in up in arms when it was first announced in May. That was a worst-case scenario number, but sources in the bank say it could actually be along the lines of $6 billion to $7 billion in red ink.
As CNBC's Aaron Ross Sorkin pointed out this morning, the $9 billion estimate was formulated back in April, well before news broke that bank's Chief Investment Office was set to lose a massive amount of money on an ill-advised and over-sized trade. That means that the numbers could have changed significantly since then, but it also means that (presumably) Dimon has known all along that the losses could be far greater than what was reported in the news — even before his numerous media appearances and his testimony before Congress. Yet all along, the bank has assured the public that the bank was more than capable of managing the losses.
Dimon has also promised that despite the "stupid" trade, JP Morgan will make a profit this quarter. They logged a $5.4 billion in profit in the first quarter of 2012, but these losses — which have mounted quickly as the bank unwinds its position faster than expected — could now exceed that figure. Their next earnings announcement will be on July 13, when the bank has promised to reveal its first concrete details on the trades and the scope of their losses.
Update: This story was first reported last night by Teri Buhl, who is none too happy about not getting credited by The Times.