More Losses for JPMorgan
JPMorgan Chase said today that losses on a disastrous credit bet could amount to more than $7 billion, and that the three London managers responsible for the trade may have tried to cover it up. This is the second time in two months that Jamie Dimon, the bank’s chief executive, has had to contain the fallout from this risk management failure. The first time, he appeared before Congress to explain how $2 billion vanished from the books. The bank has seized millions of dollars from the pay of the three traders, who could be facing criminal charges. They were investing on behalf of the bank, not the bank’s clients, something known as “proprietary trading.”
LIBOR: Bank of England and Fed Knew
A Barclays employee told the U.S. Federal Reserve in 2007 that the bank said it borrowed money for less than in reality, contributing to lowering LIBOR, a benchmark rate for short-term loans. Timothy Geithner, then president of the New York Fed, led the inquiry and briefed other regulators in 2008, including Bank of England Governor Mervyn King, but no action was taken to end rate-rigging. There is still questions about whether Geithner insisted enough to change the practice.
Syrian Massacre Near Hama: Over 200 Dead
The Syrian government killed over 200 people in Tremseh today. Most of them were civilians. With tanks, helicopters fitted with machine guns, bombs, and men carrying out executions, it is the largest killing since the uprising began last year. Bashar al-Assad’s regime is now blaming terrorists for the disaster, but the United Nations’ observers have confirmed the government’s use of heavy weaponry on the site before the massacre began. Kofi Annan, the U.N.’s special envoy to Syria, said he was “shocked and appalled” by the violence of the conflict.
Moody’s Downgrades Italian Debt
Rating agency Moody’s downgraded Italian debt to Baa2 today, underscoring concerns about the country’s ability to pass reforms that would ensure its long-term ability to repay its creditors. It still managed to sell 5.25 billion euros in three-year bonds later in the day, the maximum amount it intended to sell, for a lower interest rate than it did a month ago. Demand came mostly from domestic banks.
Digg Sells for $500,000
The social network once valued at $175 million sold to Betaworks for half a million dollars. After gobbling up $45 million from its investors since it was founded in 2004, its acquirer said it was turning it “back into a startup.” Digg still gets 16 million unique visitors a month.