- Category: Dominoe #3 - Fallen Derivatives
The unit at the center of JPMorgan Chase's $2 billion trading loss has built up positions totaling more than $100 billion in asset-backed securities and structured products -- the complex, risky bonds at the center of the financial crisis in 2008.
These holdings are in addition to those in credit derivatives that led to the losses and have mired the bank in regulatory investigations and criticism. Said an anonymous spokesperson: "I can't see how they could unwind these positions because no one can replace them in terms of size. It's a bit of the same problem they face with the derivatives trade," said a credit trader at a rival bank. "They pretty much are the market."
Source: Financial Times, May 18, 2012.