JP Morgan: a tempest no longer in a teacup?

A Martian checking in on Earth News for the first time since 2008 might well wonder whether our global banking history is repeating itself.

One of the world’s gold-plated banks goes rogue, the eurozone in crisis, and the bond market experiences a collective nervous breakdown.

It doesn’t take a Martian to work out that maybe all but nothing has been learned from the financial meltdown of 2008. Indeed, stop more or less anyone on any European street, or any American street, and they will tell you nothing’s been done to address the ingredients of the 2008 crisis.

JPMorgan: not just any bank

The ‘tempest in a teapot’ at JPMorgan – first spotted by other traders and financial experts four weeks ago – involves all the stupidity and miscalculation that described the elements of the 2008 banking crisis. When a bank anticipates $17bn in profits in 2012, a $2bn loss may not sound too bad. But JPMorgan isn’t just any bank.

I have spoken with a close contact who worked in the upper echelon of the bank. He tells me that there has been a ‘cultural breakdown’ at the bank, not by a lone ‘rogue trader’ but by the entire team in the trusted department in which the losses occurred.

JPMorgan, largely spared in the 2008 crisis, has sported more than a century of ‘gold plated’ behavioural reputation. Not any more.

Greek tragedy

And all this against a backdrop of the Greek shambles and the vulnerability of the eurozone that it exposes. Beware Greeks bearing splits, the democratic crisis in the country, the uncertainty over its membership of the euro threaten banking and currency stability well beyond the eurozone, including our own here in Britain.

This is a dangerous time. We have become inured to financial scare stories. But this is no longer a scare, it is a fact. It might be wise for us all to tune in, and hang on to our hats, or should that read back pockets?