Forget $2 billion; JPMorgan's trading losses on its bad derivative bets could reach a jaw-dropping $9 billion, sources tell the New York Times, based on an internal company report. Jamie Dimon had warned investors that the $2 billion loss could double within a few quarters, but losses have gotten much worse much faster than anticipated. That's in part because the bank is dumping its position faster than anticipated—the most volatile half is already off the books.
Part of the total losses will be announced when JPMorgan releases its second-quarter earnings on July 13. Some more optimistic observers expect the loss to top out at $6 billion or $7 billion, but that will still be more than enough to reignite debate over how tightly proprietary trading should be regulated. "Essentially, JPMorgan has been operating a hedge fund with federal insured deposits," says one Federal Reserve bank examiner.