JPMorgan: ammo for banks" enemies The US banking scene has been pure tedium compared with the goings on in Europe of late. But on Thursday afternoon it was 2008 all over again as a JPMorgan regulatory filing referenced "significant mark-to-market losses" in the bank's synthetic credit portfolio and a hasty conference call was scheduled. JPMorgan is now projecting a $800m after-tax loss in its corporate division for the second quarter thanks to a $2bn trading shortfall on synthetic credit positions, mitigated by sales of assets in its available-for-sale portfolio. Certainly, the losses may grow, particularly if rival traders now reckon they can turn the screws. But so far the numbers are not enough to dent JPMorgan's balance sheet, nor its capital adequacy ratios much, nor its ability to return money to shareholders. There is plenty here for enemies of modern banking to grab hold of though. Corporate offices invest the deposits that government guarantees make the public feel confident enough to give to banks. In other words, this is subsidised capital the likes of JPMorgan then put at risk to earn large rewards. Of course, banks try to hedge these investments. But this time $2bn has been lost in a matter of weeks. That is almost triple the net income JPMorgan's consumer and business banking division earned last quarter across 5,500 branches. It is five times what the lender made from mortgages. If JPMorgan was a pure investment bank such as Goldman Sachs or Morgan Stanley this mess would be no business of Paul Volcker. It is crazy that even these two banks have to get rid of desks that had nothing to do with the financial crisis. But the Volcker rule is on firmer ground for the JPMorgans and Barclays of the world, which mix being subsidised instruments of government savings policy on one side and risk-taking investment banks on the other. Cue the wailing.