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RESPONSE ON J P MORGAN During the JP Morgan news on Saturday morning it is helpful to have access to your personal information in an up-to-date manner. If you do not have on-line access, please apply as soon as possible, As I understand JP Morgan Chase their $2 bn trading loss was on credit derivative trading (Raymond James calls it “a technique designed to transfer risk”). It was a shock disclosure, made after the market closed on Friday May 11, which sent shares down 6%. JPMorgan said that the mark-to-market losses came in the bank’s chief investment office, which is a unit set up to invest excess deposits. There is controversy about this since hedge funds have alleged that they were taking large proprietary risks. This exposure will be in their corporate division for the second quarter thanks to their losses…but there is mitigation by sales of assets in its sale portfolio. I doubt this will cause much of a dent at JPMorgan. However, there will be other repercussions. JPMorgan is not a pure investment bank like Morgan Stanley or Goldman Sachs. Barclays and JPMorgan are global financial services firms. The Volcker rule will not affect Morgan Stanley or Goldman Sachs. The Volcker rule, which will ban proprietary trading in the US will probably stiffen regulators resolve to enforce that ban more quickly. Famed, Jamie Dimon, the CEO of JP Morgan, as you can imagine, is not happy since he has long prided himself on a great balance sheet and superior risk management. This rule will affect banks that are expansive. The bottom line for you is that whether you have a larger position in international holdings with JP Morgan and some other small positions under additional mutual fund holdings. JPMorgan has over 2.3 trillion in assets. Their mutual funds generally do not hold JPMorgan stock and, if it is allowed, it would be a minor position. This is more a hit on the bank’s core capital level which will be reduced. It is about additional regulation. In the end it is about control at a bank that The Financial Times (in their May 12 article) states is better than the average bank. JPMorgan will be stuck with this exposure which may cause volatility in the position and possibly in the markets in general. I do not think this will have a direct impact on any personal portfolios with us.