Fitch downgrades JPMorgan Chase

@CNNMoneyInvest May 11, 2012: 7:26 PM ET
Fitch downgrades JPMorgan Chase

CEO Jamie Dimon revealed Thursday that JPMorgan had suffered a $2 billion trading loss.

NEW YORK (CNNMoney) -- The closing bell brought no relief for JPMorgan Chase on Friday, as a major credit rating agency moved to downgrade its debt almost exactly 24 hours after the bank revealed a $2 billion trading loss.

Fitch Ratings downgraded both JPMorgan's short-term and long-term debt, with the latter falling to A+ from AA-. The bank, the country's largest by assets, was also placed on ratings watch negative.

Fitch said it views the $2 billion loss as "manageable" but added that "the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity."

"It also raises questions regarding JPM's risk appetite, risk management framework, practices and oversight," the agency said.

Separately, Standard & Poor's revised their rating on JPMorgan's debt from stable to negative, a signal that a downgrade is more likely to occur in the future.

The ratings actions are a reaction to news that came via a hastily arranged conference call after the market close on Thursday, when CEO Jamie Dimon revealed that the bank had suffered $2 billion in losses over the past six weeks.

The unit that suffered the losses is part of the bank's so-called corporate unit, and had been making trades designed to hedge against risk.

Net losses, after factoring in other securities gains, are expected to exceed $800 million by the end of the second quarter. And losses could increase depending on market conditions and the bank's actions moving forward.

The unit had been expected to post a net gain of $200 million.

Shares of JPMorgan (JPM, Fortune 500), which dropped 9% during the day Friday, continued to slide after hours, with shares falling another 1%. To top of page

Index Last Change % Change
Dow 18,063.38 -139.99 -0.77%
Nasdaq 4,949.05 -30.85 -0.62%
S&P 500 2,107.78 0.00 0.00%
Treasuries 2.12 0.00 0.00%
Data as of 10:43am ET
Company Price Change % Change
Bank of America Corp... 15.83 -0.16 -1.00%
Alcoa Inc 14.31 -0.87 -5.75%
General Electric Co 25.56 -0.30 -1.16%
Apple Inc 128.69 -0.67 -0.52%
Facebook Inc 79.89 0.29 0.36%
Data as of 10:28am ET
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.86%3.92%
15 yr fixed3.03%3.05%
5/1 ARM3.40%3.46%
30 yr refi3.94%3.98%
15 yr refi3.12%3.14%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates: