JPM traders not allowed to touch BS 1 week before collapse

Discussion in 'Wall St. News' started by 2cents, Apr 14, 2008.

  1. "yesterday's Wall Street News" perhaps, dunno if this was on ET or some other industry grapevine... FX trader mate from JPM tells me that 1 week before the collapse, JPM FX (flow) traders (he doesn't know for other product lines) were forbidden to accept Bear as a counterparty... like, credit limit reset event, to 0...

    easy to check if there are any regulators reading this... just check the tapes...

    i mean, how long does it take from there for a couple big institutionals giving flow to JPM to hear about that, 2 seconds? And for them to pull everything they have out of Bear, an hour perhaps 2?

    ... am not saying that JPM caused the collapse - perhaps ML, GS or some other issued similar instructions at the same time, dunno... - clearly its business and they have entire discretion as to who they'll accept as a counterparty to any trade but dude, if your broking pals don't trust you, your so toast so quick its frightening!

    now the good news is, am also hearing that management at ML has asked their Equity Deriv desks to load the boat to the fullest no questions asked (they've removed all standard risk management roadblocks)... they need to make up for tye losses on the mortgage books and accounting tricks aside, they ain't small

    who's next?
  2. I need ask 2 questions:

    1. load with longs or shorts?
    2. boat is bottom up or bottom down?

    Thank you very much in advance

  3. m22au


    It's much less likely (although not impossible) for another broker to go belly up, now that we know that the Fed is keen to bailout the I-Banks.

    However I think LEH stands out as the clear target if there is another one to fail.