Jeremy Hobson: JPMorgan Chase is in the midst of a two hour conference call to discuss its much-anticipated earnings report for the last quarter. The headline number is $4.4 billion, which is the new estimate for how much the bank lost from risky trading. The previous estimate was $2 billion.
Marketplace's Heidi Moore has been listening in on the conference call and joins us now. Good morning.
Heidi Moore: Good morning.
Hobson: So Heidi, how could they have been so wrong about the size of this big trading loss?
Moore: Well, let's take a look back at how this loss started. It was so huge -- over $100 billion that they put at risk -- that it was called the "London Whale;" it was just so enormous.
Hobson: There was a London trader involved?
Moore: Exactly -- who is now going to lose his job, as well as several other people. So JPMorgan had to do a lot of work to unwrap the more complicated trades that that trader put on in order to hide the size of his loss. So it's taken them over three months to really figure it out.
Hobson: And the new estimate, as we said, is $4.4 billion -- but I gather it could even go higher than that.
Moore: Right. You know, it could be up to $5.7 billion, or even more when all is said and done. Because JPMorgan also revealed that this loss goes back to the beginning of the year, which we didn't know before.
Hobson: And it's possible that some people besides the London trader could lose their jobs?
Moore: That's right. In fact, they will, and they're losing their bonuses -- probably the biggest clawback of Wall Street bonuses that we've seen in a scandal ever. They're going lose two years of bonuses, no severance, and they're losing their jobs.
Hobson: Now we also got a earnings report this morning from Wells Fargo, and when you look at this two big banks, how is the banking sector doing right now -- huge trading losses aside?
Moore: Right, exactly. It's not all traders on trading floors. There's a real economy at work here, and Wells Fargo's a good insight into that. Their earnings are doing well -- in fact, $4.4 billion coincidentally -- and they're lending to businesses; they're lending to people. And they're seeing mortgage applications. So that's a bit of optimism there -- and JPMorgan's lending more as well.
Hobson: Marketplace's New York bureau chief Heidi Moore, thanks a lot.
Moore: Thank you.