from Zero Hedge:
As part of the Appendixed disclosures in the aftermath of JPM’s London Whale fiasco, we learned the source of funding that Bruno Iksil and company at the firm’s Chief Investment Office used to rig and corner the IG and HY market, making billions in profits in what, on paper, were supposed to be safe, hedging investments until it all went to hell and resulted in the most humiliating episode of Jamie Dimon’s career and huge losses: it was excess customer customer deposits arising from a $400+ billion gap between loans and deposits. After JPM’s fiasco went public, the firm hunkered down and promptly unwound (or is still in the process of doing so) its existing CIO positions at a huge loss. However, that meant that suddenly the firm found itself with nearly $400 billion billion in inert, nonmargined cash: something that was unacceptable to the CEO and the firm’s shareholders. In other words, it was time to get to work, Mr. Dimon, and put that cash to good, or bad as the case almost always is, use. So what has JPM allocated all those billions in excess deposits over loans? Courtesy of Forbes magazine we now know the answer – CLOs.
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