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Old 10-18-2011, 10:37 AM   #1
Golden Cockroach
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Doodoo Banks bet against themselves ... and win

Quote :
J.P. Morgan Chase & Co. became the latest too-big-to-fail bank to take advantage of an interesting trade: the bank hedges the spread on its own debt. When investors bid up the yield — an indicator that they think the bank won’t pay — J.P. Morgan makes money. ...

Hey, it doesn’t have to make sense, it’s Wall Street.

The end result was slightly better-than-expected but lackluster profit of $4.26 billion, for the nation’s second-biggest bank by assets. The bank reported $1.9 billion in revenue from the bets against itself — the net income from the move wasn’t immediately available.
J.P. Morgan isn’t alone in this. Morgan Stanley /quotes/zigman/182639/quotes/nls/ms MS +2.23% offset losses during the financial crisis and beyond by betting against its own debt.

Would it be considered insider trading to bet against yourself if you knew you were rotten to the core?
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