Something doesn't square

How can it be that the NYT reports that JP Morgan is 110% awesome: “The strong showing may put to rest some worries that the bank was allowed to pay back its $25 billion taxpayer investment too early, after it passed the Treasury Department’s stress test in May.”

But the Wall Street Journal can report the day before that the Option-ARM mortgage loans are failing at a remarkably scary rate (37% of these loans are 60-days past due, 19% in foreclosure) – this is worse than the subprime mortgage ‘crisis’ of 2007 – and that JP Morgan:

holds $40.2 billion in option ARMs that the bank acquired when it purchased most of Washington Mutual Inc. last year. The Seattle company’s banking operations were seized by regulators, and the holding company filed for bankruptcy protection.

The New York company said in a filing it has some exposure to an additional $46.5 billion in option-ARMs sitting in complex off-balance-sheet entities. J.P. Morgan declined to comment.

So are they at risk of losing some good percentage of $90 billion on their books (WSJ), or should we just be focusing on their ‘stellar trading and investment results’ (NYT)? The scary other-shoe-to-drop sense of foreboding in me makes me inclined to the former. But maybe I am too simple to appreciate their awesomeness.

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