J.P.Morgan, widely considered the best run of all the large banks in America, if not the world, on May 10th provided the kind of news that has become all too common in the financial industry: a $2 billion charge for (A) errant trades. The markets responded within seconds of the opening on May 11th, sending Morgan’s share price down over 9%, and its value by $14 billion. Late on May 11th, Standard & Poor’s announced it was downgrading the outlook for the company, and Fitch knocked down its ratings.
But while none of these moves were(B) trivial, they were hardly calamitous. The share price decline was sharp but finite. Morgan’s rating remains among the strongest in the industry. Its capital ratios are robust. And even after the loss, it is still expected to earn more than $4 billion in the current quarter, and produce record earnings for the year.
