Jeremy Hobson: Bank stocks are down. JPMorgan's down several percent right now. The reason: a surprise admission after the markets closed yesterday of a $2 billion loss at the bank. The result, apparently, of bad bets on corporate debt by a London trader. JPMorgan CEO Jamie Dimon, who's known as the "King of Wall Street," said his bank has egg on its face.
Jamie Dimon: These were egregious mistakes. They were self-inflicted. We're accountable. What happened violates our own standards and principles by how we want to operate the company.
For analysis, let's bring in Chris Low. He's chief economist at FTN Financial and he's with us live, as always, from New York. Good morning.
Chris Low: Good morning.
Hobson: So Chris, how big of a deal is this?
Low: Wow, a $2 billion is a big deal anywhere and that's the place you have to start. But in this case, it's even bigger because JPMorgan has been -- and particularly Jamie Dimon at JPMorgan -- has been the champion pushing back against increased regulation here in the United States. Really, the only banker speaking out on that. And that's going to be a much harder argument to make today.
Hobson: Does that mean, do you think, we're going to see the Volcker Rule -- the famous Volcker Rule -- which prevents banks from trading with their own money?
Low: Well, it does. The rule was part of the original Dodd-Frank law. Regulators say they are determined to write the rule and get it out there, but it's been delayed by months. It's proving very, very difficult to put into law because there are certain trading activities which should be allowed and they can't figure out which is which. But certainly this morning we're hearing a lot more voices calling for them to get moving and get that on the books.
Hobson: And Chris, regulation aside, just from a financial perspective -- is there concern that there could be losses like this at other banks?
Low: Well, there is. The Wall Street Journal, in particular, named names this morning. Several big banks that had similar bets. This was primarily a bet on corporations, which would have benefitted if Europe continued to recover. And of course, after the elections in Europe on Sunday, the European economy and European markets are thought at least to have suffered quite a bit. That trade has gone bad, probably beyond JPMorgan.
Hobson: Chris Low, chief economist with FTN Financial.