the london whale capsizes the j.p. morgan see i ope profit boat jamie dimon announces a two billion dollar trading loss saying more could be on the way saying big mistakes were made but hey this doesn't make the case for more regulation or for the volcker rule we'll talk about why this is exhibit a for why the volcker rule is needed that said we'll ask if the rule in its current form would have even stopped the london whale marketplace's heidi moore joins us plus we will look at how the federal reserve may be in a blink and incentivizing this kind of risky behavior in too big to fail firms also president obama's mortgage financial fraud task force was touted in his state of the union address but some allege it's been starved of staffing and momentum since then some members of occupy wall street have offered to help but they haven't necessarily been well received we'll talk to two of them let's get to today's capital account. so just yesterday ben bernanke in a speech was talking about how conditions in the banking syst

all right we're talking about the london whale j.p. morgan and what this means about the broader risk in the banking system and what it would do if there was an exhaustion is risk like what's going on in europe if that really blows up which it could first i want to play a little bit of president obama today on the view talking about reacting to this j.p. morgan news take a listen to this this is the best or one of the best managed breaks where you could have a bank that is in a strong isn't as profitable making those same bets and we might have had to step them and that's exactly why wall street reform so important. ok so his idea is that j.p. morgan is so big that you know this doesn't matter in this case but if it was a smaller bank we'd have to step in but there is this whole broader issue of more widespread risk that could be bigger for j.p. morgan that could be bigger for other too big to fail banks and the question is not if they're too big to fail well that is the question but also if they're too big to manage so i want to bring

or do what the london whale does, text the word awake followed by your response to 622639. we'll read the best responses later in the show. the next 30 minutes will be your cram session for this thursday, may 17th. a lot to tell you about, including the census numbers that some are calling watershed. for the first time in american history, most newborn babies come from minority groups. we'll look inside those numbers. plus, the epic meltdown in the final round of "wheel of fortune" that stunned even a cool veteran like sajak. look at that clue and tell me you wouldn't get that. wait until you see this. first, though, let's get to the news live at 5:30 a.m. here at 30 rock in new york city. >>> vice president joe biden is heading to martins ferry, ohio, this morning, finishing off his two-day swing through that battleground state. in a fiery speech at a youngstown manufacturing plant yesterday, the vice president addressed the challenges facing the middle class, something he suggested mitt romney knows very little about. >> i resent when they talk about families like mine th

morgan former executives have been coming out since the london whale news broke and saying is that jamie dimon over the past five years according to bloomberg had basically transformed this into a proprietary trading operation j.p. morgan said oh this london whale is nothing to worry about this this threat this risk is you know nothing because they have been rattling debt markets have been making a big splash if you will also then jamie diamond has this kind of surprise bizarre conference call yesterday saying hey this trade has lost two billion dollars this portion of the company will post an eight hundred million dollar loss and there could be a billion dollar loss from this trade again on the way which brings up a lot of questions about what this portion of the bank is doing because it sounds a lot like proprietary trading as opposed to hedging or ok well so that's what i want to get into right because all of the discussion is the volcker rule and a lot of people are saying that this is just the perfect example of why we need things like this in place why we need more regulation but t

>> well, the london whale was named bruno-- and he, i know, he is a trader in london in this synthetic credit mart, y know, cred default swap market. he's from pairs. he computes to london, apparently he wears black jeans all the time. but he basically was called the whale because in this market which sounds very big, you're talking about trillions of dollars in number, but it's actually often very illiquid. he amassed his position in one index, i actually forget what it is called, but an index that references 121 kind of corporate debt names. and you know, he took such a large position, he was so known in the market for being amassing that portion you kn, heas like a whale in the ocean. he was sort of obvious and noticeable. so hedge funds and other type os of traders that operate in this market noticed what he was doing. which was driving down the price of protection on these types of companies. and they took offsetting bets. so that why he was a whale. >> brown: okay. but not a rogue trader, as we often use the term. i mean he was not operating off on his own. >> no, i think that's

all know that jamie diamond has egg on his face over this two billion dollar trading loss the london whale lost look you can see there he's quite literally has egg on his face that's what protesters did to his photo reportedly but did his reputation and j.p. morgan's reputation allow the bank to escape scrutiny it's an interesting question and here to answer that and more is francine mckenna she is author of the blog read a regarding the auditors and a columnist for forbes and american banker and she's done a really good interesting work on all of this stuff and first of all francine thank you so much for being on the show and welcome to capital account thank you thanks for having me absolutely now let's just touch on facebook because we cannot avoid it today it is everywhere we've talked about it on the show before we've talked about it with people like reggie middleton who was not enthusiastic about this company at all said this is a story stock and overvalued all these things i know you have some concerns about facebook what are they. talk about anticlimactic i think of it a sort of mor

. >> reporter: a trader nicknamed the london whale, managed the investments. >> the strategy we had, badly monitored and should never have happened. >> reporter: c exo jaime diamond said last month, he was wrong to ignore warning signs, but he said the bank is not in danger of failing >> we are still going to earn a lot of money. we hurt ourselves an our credibility and you have to fully expect to pay the price for that. >> >> reporter: that has already happened. the price of jp morgan's stock dropped and securities and exchange commission has launched and investigation. more than three years later, some say the banking industry is taking on too much risk. >> jp morgan chase and jaime diamond have the brightest guys in the room. if they have these problems, god knows how many others have these. this could lead us pack to where we were in 2008. >> reporter: lawmakers backing an overhaul bill are pushing for a final version that lead to this $2 billion. >>> and the chief investment officer in question worked for the company for three decades and reportedly offered to resign last week.

the trader known as the london whale was based in the london office so quite how the fbi will extend their investigative tentacles into the uk to find out more about the trading operations remains to be seen. but i guess there will be some question marks about the allowance to exceed limits to trade and whether any rules were breached as far as this particular trader were concerned. because, at this stage, nobody has been able to find any wrong doing. so far it's just looked like a very bad deal. you said yesterday they voted through jamie dimon's compensation package. it is worth pointing out 40% of shareholders voted against him holding on to the chairmanship position, which on wall street is a big deal, willie. >> yes. for a popular ceo, a big number. a lot to get to this morning. want to turn to greece, the front page of the "wall street journa journal", grooek depositors pulling 700 million euro out of the banks, greece teeters as talks fail. again, we asked the question yesterday, we'll ask it again, greece's chances of staying in the eurozone, geoff, different today than yeste

banks and fund managers asset managers in order to comply with these regulations for what so for a london whale multibillion dollar trading loss at the quote unquote best managed bank that doesn't seem like a lot of bang for your buck our next guest argues these and harold flood models keep blowing up because fundamentally nothing has been done to rein in moral hazard or assert personal accountability at these systemically dangerous financial institutions and combine that with free money from the fed and you can look forward to more whales london or otherwise no matter how much is spent on dodd frank or the volcker rule and in this twisted world of these big huge too big to fail firms is one consequence of this trading loss unintended or otherwise that j.p. morgan may actually stand to benefit from it while bob english is here he's contributing editor for a zero hedge in economic policy journal dot com and he will make the case first of all it's so nice to have you on the show welcome back to capital account bob. thank you it's very great to be here again well we always love having you and firs

one trader known as the london whale designed it from the uk office. the idea was to balance risk but the strategy backfired. the news sent shares of jpmorgan chase sharply lowered. bank stocks dropped in both europe and the u.s. the office that managed jpmorgan's losing portfolio was betting that the economic recovery would continue so last month's market volatility was a disaster for the investment. dimon says the bank remains profitable but admitting the mistake was egregious. >> the portfolio has proven to be riskier, more volatile and less effective an economic hedge than we thought. >> reporter: dimon said the bank is learning from the mistake and will fix it but admitted it's a major embarrassment. jpmorgan's blunldzer has attracted the attention of the securities and exchange commission and fueling new debate on whether wall street need as much tougher crackdown. alexis christoforous, cbs news, wall street. >>> let's talk about the elections because voters are calling the economy the number one issue in this election. but president obama has be

whales like the guy in london. you can tie it all to the jpmorgan story today. >> maybe all that yogurt. >> are you going to eat two again? >> i just brought one. i brought a protein shake and one. >> but the protein shake instead of yogurt is better? but you can get away with it. >> all the donuts i've been eating. >> let's talk more about some of these controversies we've been following. scott thompson reportedly telling his top executives that he never provided a resume or any incorrect information to the company. in the meantime, chesapeake ceo continues in the headlines amid a lot of questions about his personal business dealings and how it's impacting the company. jeff, it's great to see you. >> cky, great to see you. thanks. >> let's start things off with i can't yahoo!. scott thompson selling he did not provide this incorrect information. what do you make of that? >> it's bordering on one of these coverups is worse than the crime type situations. now if there wases any question in might be's mind about abou

who actually took these huge positions betting on credit indices or something like that. >> the london whale, who is also known as baltimore, his name is bruno icksal. so far what we know is he has not lost his job. it's unclear and may even be unlikely that he does. he was following the orders of a man named mackris which some kind ironic that his name is akill he's. he's greek. macris ordered these trades, ordered this complicated set of derivatives that j.p. morgan is blaming on its loss. akill he's is transitioning out of his duties. they're keeping him on to help find the dead bodies. they need him there to try to explain what happened. but he's lost all trading responsibilities. he's lost all day-to-day management responsibilities. they came in today. they named a new head of the chief investment office. he cleaned house today. named a whole new slate of people to run that office. they've been put in place immediately. >> warner: what about ceo jamie dimon's involvement here. you had an interesting story on this morning that he actually helped push this unit to become edgeier, to take,

. >> to other traders are also expected to leave including the so-called london whale who managed the losing portfolio from the u.k. office. trading blunders pushed jp morgan stock lower. the rest of the market off to a pretty rocky start. more financial troubles in greece rattling the dow. leading 2 triple digits drop. at the open still down triple digits, 107 and change. facebook founder mark zuckerberg turns 28 years old today. the much-anticipated of facebook public stock offering set to go this week. on friday the initial offering could value facebook at nearly $100 billion. that is more than disney, for, giving mark zuckerberg more than $17 billion. >> some of the world's best bicyclist are racing down the coast in northern california right now. stage two of the amgen tour of california got underway just about an hour ago. these are pictures are here from chopper five of the marina green and the presidio in san francisco. the riders headed to the golden gate national recreation area and then out to the great highway. now they're paddling down highway 1 and eventually passing thr

the man at the center of the investigation is named bruno iksail, they call him "london whale" accusedking risky moves with $100 billion in investments. today, david gregory asked the ceo if he feels his company broke laws. >> we know we were sloppy, stupid, bad judgment. we don't know if any of that is true. regulators should look at something like this. that's their job. we are open to regulators. they will come to their own conclusions. we intend to fix it. learn from it. be a better company when it is done. >> diamond was one of the most outspoken critics of increased bank regulation. you can seat in the view with david gregory sunday on meet the press. >> a verdict in the case of the robo calls, encouraged voters to stay home 2010. a jury convicted julius henson of conspiracy for distributing campaign material without permission. they acquitted him of three serious charges, including influencing voters through fraud. an aide to governor bob erlich. >> several households could be forced to change their address. a descendant of one of the founding families is pushing to get sager av

one trader, nicknamed the london whale or voldemort, is believed to be behind the trading. >> this strategy was flawed, poorly executed, poorly monitored. it was more volatile than we thought. it is obvious at this point that there were many errors, sloppiness and bad judgment. >> the trading involved this office in the city of london. in line with normal practice, the bank looks at all the risks it has built up and decided to take out an insurance policy. put simply, that strategy went wrong. the banking industry on both sides of the atlantic has been trying to water down proposals for tougher regulation, but some experts say the latest jpmorgan loss would dramatically shift the debate. >> for those who are fed up with bailing out these big institutions, for those of us who are fed up with bankers and traders making millions of dollars in bonuses each year and these firms existing for their benefit instead of the benefit of the shareholders, this is a watershed moment. >> with its share price plunging today, it is certainly a major blow for the wall street giant. it seems clear the story i

. >> concerns about jpmorgan's brazen $100 million bet by a trader nicknamed the london whale, were first raised a month ago. diamine then played it down, calling the media reports a tempest in a teapot. he now said, quote, there are many errors, sloppiness, and bad judgment. >> hey, hey, millionaires, pay your fair share. >> occupy wall street protesters have targeted dimon. who made $23 million last year. in october, several hundred marched on new york's upper east side to his home. now the bank's admission is new ammunition for those in washington calling for stricter regulations on wall street. >> if they get away with this kind of bet, we're going to be right back in the soup again. we're going to end up facing economic disaster, a depression, or having to bail out banks again. we don't want to be put in that position. >> legislators and regulators have been pressing to separate the casino element of big banks gambling with share holder money from the more basic operations. jpmorgan's loss is renewing the calls for the biggest banks to be broken up. >> i would like to see not only th

it's also being reported that the trader at the center of the scandal, a man known as the london whale, will leave the company. but it's not clear exactly when. >>> overseas markets remain unsettled over greece's crisis. tokyo's nikkei average gained 75 points today. hong kong's hang seng was off 71. in london, the ftse opened lower. and on wall street, the dow lost 33 points yesterday. the nasdaq index gave up 20. >>> the federal trade commission says wearing skechers finance shoes don't help you get in shape. the company is paying for misleading advertising, although it denies the allegations. those that purchased the shoes may get a refund eventually. >> don't believe everything. >>> and finally, volkswagen may have been the victim of a fiat prank. google street view shows a fiat 500 right there, parked in front. >> it's likely to stay there on google until the next update, which is months from now. fiat, though, they're not admitting anything. >> if they're behind it, smart, guys. smart. like your style. >>> when we come back this morning, more trouble for an already troubled famil

this is the man behind the trade, the so-called london whale is sent packing. the question is, w

this is the man behind the trade, the so-called london whale is sent packing.stion is, what does this growing story add up to for you? we'll have a live report. >>> and kobe and the lakers take a seven-point lead into the final two minutes in a crucial game two in oklahoma city. the question is, what happened to l.a. from there? it's "way too early" for this. >>> good morning. i'm willie geist, and this is "way too early," show that's polling well among swing voters whose night terrors keep them awake. i'm glad you're up with us this morning watching on msnbc or listening live on sirius xm radio. e-mail me, won't you?

. >> because of the size of his trades, he was nicknamed the london whale., he is being called face dale will by no other than the j.p. morgan tased see the room. from >> these were self-inflicted mistakes. what happened violates our own standards and principles on how we want to operate the company. >> he said it could get worse. this drama has on the attention of government regulators if if for the securities and exchange fish and fired off a nearly two- page request for more earth information. >> we are presided over by a very intelligent people, to make the mistake of this sort is a sign of what you need regulation. foss >> coming up, we spent some time and new work where a school zone has no meaning to some drivers. i will explain in the next edition of people behaving badly. >>stanley: children are unpredictable. they can pop in and out of traffic at any given time. being in the schools on increases those odds by 100 fold. if you put someone behind the wheel of a teutonic vehicle and they're not paying attention, something could go wrong which leads me

bets were placed out of the bank's london office by a trader named bruno iksil, nicknamed the "london whale." but iksil was not a rogue, and critics say that raises serious questions about risk management at america's biggest bank. michael houston is an analyst with the london investment firm c.m.c. markets. >> the "too big to fail" culture leally is still there, and it is a concern and i think it will make the proponents of the volcker rule even more emboldened. >> reporter: the volcker rule, .et to go in into effect in july, would prevent banks from making speculative bets that could put both themselves and taxpayers at risk. it's named for the man who proposed it, the 84-year-old former federal reserve chairman, paul volcker. ha you believe the culture on wall street has to change? >> yes. ( laughs ) >> reporter: in an interview for anki sunday morning" in march, halcker said he thought the traditional culture of banking had been distorted by speculation. >> my concern has been the health of the banking system. >> reporter: but banking executives, including dimon, have attacked both the

. >> concerns about jpmorgan's brazen $100 million bet by a trader nicknamed the london whale, were first raised a month age. diamond then called it down, calling the media reports a tempest in a teapot. he now said, quote, there are many errors, sloppiness, and bad judgment. >> hey, hey, millionaires, pay your fair share. >> occupy wall street marchers have targeted diamond. several marched to his home. now the bank's admission is new ammunition for those in washington calling for stricter regulations on wall street. >> if they get away with this kind of bet, we're going to be right back in the soup again. we're going to end up facing economic disaster, a depression, or having to bail out banchgs again. >> legislators and regulators have been gambling to separate from the bugger operations. >> i would like to see not only the organizational structures of the big banks simplified but the strategies and instruments they use simplified. >> it won't put a big dent in the firm. it's still expected to make a profit $4 billion next term, but it's raising anxiety over whether banks are making bi

morgan's earnings which jamie dimon has been assuring everyone that this london whale trading loss is not life threatening to but he's saying hey these are a form of theft those earnings to begin with theft from savers from retirees pursuant to the federal reserve's zero interest rate policy so let's bring general back in because i want to ask him about this notion both the resignation and the unintended consequences of the federal jim rickards in this op ed really get to the point is this the real issue the kind of staffed pursuant to the federal reserve's policies and if jamie dimon had a shred of integrity would he resign. i mean that you know i can't speak for his integrity like is it by their deeds you shall know them and when you listen to what he says you know it's just a lot of jibberish going back and forth as i've read over the transcripts of his meet the press to interview yesterday so you know the whole thing is the criminal operations the banks have been robbing the people in broad daylight on and on that every level they could pull it off and it just keeps going i love o

as everyone has been digesting over the last several days the two billion dollar loss from the london whale trade that's now infamous well there are so many questions liz questions about the kind of financial shenanigans that were allowed that could have massed this kind of risk taking because that's just not about one two billion dollar loss that's something that could be a lot more broadly a problem and speak to this is demick risk that still exists in the banking system it's funny because i don't know if you saw president barack obama on the view today talking about the reason why we passed financial reform this was it this two billion dollars trading loss it shows why we did this why why we did what then two billion lot still have been it wasn't stopped by regulations or reforms and the ones that are in the pipeline it's very questionable of they would have stopped it either so we're going to talk about what really is going on here what the real deal is right that's coming up next on the capital account with lauren lyster thanks for that update lauren that's going to do it now for the n