HispanicBusiness

Dubbed the king of Wall Street, Jamie Dimon, the chief executive of JPMorgan Chase, was forced to announce that the US' biggest bank had racked up losses of about 2 billion dollars in risky trading since the beginning of April.

"There are many errors, sloppiness and bad judgement," said the normally ebullient Dimon, considered one of the most successful bankers in the United States.

"We deserve every critic that we get," he said in a hastily called telephone conference Thursday.

Since then Dimon has watched shares in his bank take a pounding, with the stock plunging by 9 per cent in early Friday trading in New York, after falling by more than 6 per cent in late electronic trading on Thursday following the surprise announcement.

"Obviously, mistakes have been made in the risk management of the bank," said Thomas Hartmann-Wendels, economics professor at the University of Cologne. "I do not think that a single trader has attempted to deliberately violate rules."

The news set up a rough day's trading for other Wall Street firms, with shares in JPMorgan Chase's key investment bank rivals such as Wells Cargo and Bank of America slumping by about 3 per cent as the trading day got underway.

This in turn helped to drag down New York's Dow Jones Industrial Average by 0.4 per cent.

Traders said the drop in banking stocks also reflected investors' concerns that other big US finance houses might have run up similar losses that have still not been revealed.

Indeed, JPMorgan Chase now adds its name to a list of other big banks that have found themselves being forced to reveal big trading losses. These include France's Societe Generale and Switzerland's UBS.

JPMorgan Chase's admission about the trading losses could not have come at a worst time for the global banking system.

Investors are already concerned about the exposure of several international financial houses to the eurozone's debt crisis.

In addition, there are worries about the global economic outlook amid signs that the growth in key economies might have lost momentum in recent months.

JPMorgan Chase said the losses occurred in the highly complex synthetic credit securities business, which are derivative investments tied to credit performance.

As a result, its statement late Thursday helped to rekindle memories of the banking sector speculation that paved the way for the 2008 financial crisis.

The trading losses came against the backdrop of a divisive debate in Washington over bank regulation in the wake of the crisis that engulfed the financial system in 2008.

Critics of the US banks seized on the announcement as evidence of the need for stepped-up supervision of the financial sector. Democrat Senator Carl Levin said the losses were "a powerful reminder" of the need for strenuous regulation of the banking system.