“JP Morgan has assets of $1.6 trillion and equity of $126 billion. They seem reasonably well-capitalized at 7.6%. We just hope that there’s no problems in their almost $92 trillion derivative exposure that is more than 50 times their assets and, more importantly, greater than 700 times their equity. We hope them to be well-matched, but if they are even the tiniest bit wrong, their equity could be wiped out as their equity represents just 0.13% of their gross derivative exposure.” – Steven Romick, writing in Agora Financial’s Rude Awakening e-newsletter, May, 2008
Jim’s Quote of the Day:
