Jamie Dimon of JPMorgan Chase & Co. Fitch Ratings Friday downgraded JPMorgan Chase (JPM), one day after the largest US bank disclosed one of its units had lost $2 billion in trades. Fitch lowered JPMorgan\'s short-term and long-term debt - reducing the long-term grade to A+ from AA-, a CNN Money special reported. Fitch placed the bank on ratings watch negative.
In a statement announcing the downgrade, Fitch said it considered the $2 billion loss as \"manageable\" but said \"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,\" Fitch said.
Shares of JPMorgan fell 9 percent in New York Friday, and the falloff persisted after hours, CNN reported.
US and British regulators said they have been discussing the losses at JPMorgan Chase for almost a month.
The New York Times reported Friday that inquiries, although none of them are formal yet, have centered on a derivatives trader based in London, who has been tagged with the nicknames \"The London Whale\" and \"Voldemort.\" The trader, Bruno Michel Iksil, had built up derivative positions valued at $100 billion, The Wall Street Journal reported.
The bank said Thursday it had lost $2 billion in trades at its Chief Investment Office, a risk assessment branch where Iksil works.
Iksil did not return calls requesting a comment. He still works at the bank, the Journal said.
Chief Executive Officer James Dimon said Thursday the losses were \"self-inflicted and this is not how we want to run a business.\"
By Friday pundits and politicians were calling the losses validation of the so-called Volcker Rule, named after former US Federal Reserve Chairman Paul Volcker. The rule is meant to limit or ban proprietary lending by commercial banks - and prohibit them from owning hedge funds, which are storefronts for investment risks.