Trading Now

Trading Now

Tuesday, August 25, 2009

Jamie Dimon on CNBC back in February said JPM has virtually no exposure to CMBS: guess again

*Back in March of this year, I wrote a letter to JPM corporate headquarters, Jamie himself, protesting their increase of my credit card interest rate. I had just heard him coming out of that meeting with Obama on CNBC claim JPM had little exposure to the CMBS market and I thought what a liar. In my letter I accused him of such and demanded a reduction to 8%. I got a response from corporate headquarters, some very nice woman, and they gave me 8.9% for a year. So here we are many months later and lo and behold: not only do they hold CMBS, but they hold the MAJORITY of it.


  1. That's chart is not directly correlated - CMBS is about 1/4 of the overall commercial real estate loan market, and that graph shows the entire CRE loan market not just CMBS.

    I'm not sure if JP holds a CMBS fund or if they have it on their books other than for trading, but they are one of the primary dealers in that market. Their head of research (if he's still there) is arguably the most well-respected one in that sector. Also, I don't think they got stuck with Bear's CMBS holdings, but I don't recall the specifics - I think all of this went into Maiden Lane.

    However, that simply makes the graph even more disturbing. The bulk of the problems in CRE is not in CMBS, but rather in the short-term floating rate loans on transitional properties - OR, even worse, loans that were intended for CMBS but were so poorly underwritten they didn't make it in a deal.

  2. Exactly. And loans that are not being restructured. And now WE all own it. Thanks for the expansion.



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