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Losses on JPMorgan Chase's bungled trade could total as much as $9 billion, far exceeding earlier public estimates, the New York Times' DealBook blog reported today. When Jamie Dimon, the bank's chief executive, announced in May that the bank had lost $2 billion in a bet on credit derivatives, he estimated that losses could double within the next few quarters. The losses, however, have been mounting in recent weeks as the bank has been unwinding its positions. The bank's exit from its money-losing trade is happening faster than many expected. JPMorgan previously said it hoped to clear its position by early next year; now it is already out of more than half of the trade and may be completely free this year. As JPMorgan has moved rapidly to unwind the position -- its most volatile assets in particular -- internal models at the bank have recently projected losses of as much as $9 billion. In April, the bank generated an internal report that showed that the losses, assuming worst-case conditions, could reach $8 billion to $9 billion.

Barclays has agreed to pay hundreds of millions of dollars to resolve accusations that it attempted to manipulate a crucial interest rate, the first settlement in a sprawling global investigation targeting many of the world's biggest banks, the New York Times' DealBook blog reported today. The British bank struck a deal with regulators in Washington, D.C., and London, and the full terms of the deal will be announced later today. The U.S. Commodity Futures Trading Commission is expected to levy a $200 million penalty, the largest in the agency's history. The Financial Services Authority in London is also involved in the action. The investigation centers on the way Barclays and other big banks set a key benchmark for borrowing known as the London Interbank Offered Rate (LIBOR). Regulators have questioned whether the banks attempted to improperly set the rate at a level that was favorable to their own institutions.

MF Global Holdings Ltd. chapter 11 trustee Louis Freeh was given the right by a London judge to participate in all U.K. court proceedings involving the failed brokerage, Bloomberg News reported today. Freeh has filed a London lawsuit against the administrators of the company’s U.K. unit seeking about $400 million from internal repurchase agreements used to move money around the company. Legal disputes between multiple trustees winding up MF Global's British and American entities have tied up about $1.1 billion of clients' and creditors' money, which cannot be returned until courts decide who controls the assets. MF Global filed the eighth-largest U.S. bankruptcy on Oct. 31 after getting margin calls for its bets on European debt. A separate $700 million case between U.K. administrators KPMG LLP and the trustee of the MF Global U.S. brokerage unit over disputed assets is set to go ahead in London in April.

JPMorgan Chase & Co. will improve risk management of the unit that racked up more than $2 billion of trading losses, while avoiding big bets on derivative and private-equity investments, the Wall Street Journal reported today. The shifts are being prompted by an internal review by senior bankers of what went wrong and how to prevent another trading blowup. The review is not complete, but early conclusions focus on improving JPMorgan's Chief Investment Office (CIO) risk-management processes rather than curtailing investment options or broadly reining in risk. The botched bets at the CIO have cost the bank $17 billion of market value.

Stocks fell more than 2 percent on Thursday, as mounting evidence of a global economic slowdown seemed to sink in for investors, The Washington Post reported yesterday. The Dow Jones industrial average dipped nearly 2 percent, shedding 251 points to close at 12,573.57. Adding to the grim mood, Moody’s downgraded 15 major banks, citing concerns about the global economy. Among the institutions downgraded were JPMorgan Chase, Goldman Sachs and Bank of America. The move could damage the profits of these banks in the short term and raise their borrowing costs. Perhaps more significantly, the decision by Moody’s raises uncertainty about the long-term health of the banking system.

JPMorgan Chase & Co. Chief Executive James Dimon sparred with lawmakers of both parties as an appearance in the U.S. House of Representatives proved more contentious than his Senate hearing last week, the Wall Street Journal reported today. Dimon faced pointed questions about the bank's lobbying on derivatives rules, risk models and on whether the bank is so large and complex that it would have to be rescued by the government if it were to fail. Several lawmakers accused Dimon of being more focused on trading activities than on lending to consumers. Rep. Maxine Waters (D-Calif.) pressed Dimon about the bank's opposition to a proposal that all trades made by U.S. banks, even those booked offshore, be included under new rules. Dimon said that proposal would harm the bank's ability to compete overseas. The bank's customers "will go elsewhere if we can't give them the best possible deal," he said. Earlier in the day, bank regulators said a lack of disclosure by JPMorgan regarding risks it was taking hampered efforts to prevent the trading losses of more than $2 billion the bank disclosed last month. Comptroller of the Currency Thomas Curry testified that the regulator is probing the level of reporting provided by JPMorgan's Chief Investment Office, the unit responsible for the losses.

A Commodity Futures Trading Commission (CFTC) subcommittee today is expected to propose a roughly 60-word definition of high-frequency trading that would define it broadly, the Wall Street Journal reported today. The announcement follows three months of meetings by an industry group that was formed by the CFTC to help the agency wrestle with the impact of rapid-fire trading on financial markets. Such trades now generate more than half of all U.S. stock- and futures-trading volume, and critics claim that the surge in high-frequency trading has left Wall Street more vulnerable to computer-driven failures that sap investor confidence. According to a draft version, the CFTC subcommittee working group is proposing to define high-frequency trading as a form of trading that uses sophisticated computer programs to make automated decisions in the markets, with no human decision-making involved in individual transactions. The draft also defines such trading as using technology to amplify the speeds at which firms send orders to exchanges and other trading venues, and generating large volumes of messages, orders and cancellations compared with other, slower types of trading.

Lehman Brothers Holdings Inc.'s creditors dropped a legal action against U.S. Treasury Secretary Timothy Geithner after he agreed to answer questions in writing about the defunct investment bank's failure, Bloomberg News reported yesterday. Lehman's creditors' committee asked a judge in February to force Geithner to give a deposition in Lehman's lawsuit against JPMorgan Chase & Co., which alleged that the bank siphoned $8.6 billion out of Lehman during the 2008 credit crisis, helping to cause its collapse. A U.S. district judge closed the case yesterday after creditors agreed to end their action, according to a federal court filing. Geithner was president of the Federal Reserve Bank of New York when Lehman collapsed. He held discussions in the week before the bankruptcy filing with Richard Fuld and James Dimon, Lehman's and JPMorgan's chief executive officers, on the collateral that JPMorgan was demanding for its loans, according to creditors' court filings. He also met with Dimon and Henry Paulson, then treasury secretary, to discuss "concerns" that Dimon was using the crisis to strengthen JPMorgan at Lehman’s expense, creditors said.

JPMorgan Chase CEO Jamie Dimon, who will testify today before the House Financial Services Committee, plans to stick to the script from his first appearance last week on Capitol Hill, the New York Times DealBook blog reported yesterday. Dimon's prepared remarks for the House panel, released yesterday, tracks nearly word for word with his remarks prepared for last week's Senate Banking Committee hearing. There are, however, a few trivial changes scattered in the four-page testimony. In highlighting the bank's "fortress balance sheet," Dimon clarifies that the bank has "well over $30 billion in reserves," sans an earlier specification that the money was "loan loss" reserves. It is unclear why the bank abandoned the earlier wording. In the House committee version, Dimon also tempered an earlier boast that, as "one of the largest small business lenders," the bank’s lending to small businesses jumped 70 percent. It turns out, the actual jump was 52 percent. The tweaked House testimony clarifies the earlier proclamation. Click here for more information on the House Financial Services Committee hearing.