JPMorgan Sold $25B in Securities to Mask Loss

In order to soften the Q2 earnings blow inflicted by its more than $2 billion loss, JPMorgan is "dipping into the cookie jar," Reuters reports. Earlier this month CEO Jamie Dimon revealed that the bank had sold securities that generated $1 billion in gains, and a Reuters analysis breaks down the math: The bank sold an estimated $25 billion in profitable securities in order to generate gains of that size, it calculates, and analysts are calling it a bad move. "They really made two stupid decisions," says one: They took risks with derivatives they didn't understand, and they sold "assets with high income that they can't replace."

Plus, JPMorgan will have to pay an estimated $380 million in taxes on the gains, according to the analysis, which calculates that the net gain is just $620 million, or 16 cents per share. (Earnings of 90 cents a share are expected for the quarter.) Jamie Dimon himself highlighted the "tax inefficiency" of making such a move in the May 10 talk to analysts, but the bank is under pressure to show profits, especially considering total losses from the London Whale debacle could go past $5 billion. (More London Whale stories.)