American Airlines Bankruptcy Helped JPMorgan To $6 Billion Loss

NEW YORK (TheStreet) -- In the ever more twisted tale of JPMorgan's (JPM_) risky trading activities, a Senate report released on Thursday indicates that the bankruptcy of American Airlines (AMRPQ) helped the bank to an over $6 billion loss, known as the "London Whale" trade. The Senate subcommittee on investigations report -- titled JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses -- makes the case that the bank's backfired trading strategy escalated on the heels of a $400 million payout from the bankruptcy of American Airlines in late November 2011.Had American Airlines fallen into bankruptcy just a few weeks later, JPMorgan stood to lose on a trade in complicated credit derivative instruments, potentially exposing a flawed strategy undertaken by the bank, according to the Senate report. Instead, American Airlines declared bankruptcy on November 29, netting JPMorgan between $400 million to $550 million in trading profits that the Senate report says gave traders and risk managers the confidence to grow the risky "London Whale" trade from about $51 billion in notional value at the end of 2011 to $157 billion by early 2012. Read more at http://www.thestreet.com/story/11870749/1/american-airlines-bankruptcy-helped-jpmorgan-to-6-billion-loss.html