(CBS)-- JPMorgan Chase & Co. (JPM), the largest bank in the United States, said Thursday that it lost $2 billion in a trading portfolio designed to hedge against risks the company takes with its own money.
The company's stock plunged more than 5 percent in late electronic trading after the loss was announced. Other bank stocks, including Citigroup and Bank of America, suffered heavy losses as well.
"The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought," CEO Jamie Dimon told reporters. "There were many errors, sloppiness and bad judgment."
The trading loss is an embarrassment for a bank that came through the 2008 financial crisis in much better health than its peers. It kept clear of risky investments that hurt most of its peers.
Partly because of the $2 billion trading loss, JPMorgan said it expects a loss of $800 million this quarter for a segment of its business known as corporate and private equity. It had planned on a profit for the segment of $200 million.
The loss is expected to hurt JPMorgan's overall earnings for the second quarter, which ends June 30. Dimon apologized for the losses, which he said occurred since the first quarter, which ended March 31.
"We will admit it, we will learn from it, we will fix it, and we will move on," he said. Dimon spoke in a hastily scheduled conference call with stock analysts. Reporters were allowed to listen.
JPMorgan is trying to unload the portfolio in a "responsible" manner, Dimon said, to minimize the cost to its shareholders.
Among other bank stocks, Citigroup was down 3.2 percent in after-hours trading, Morgan Stanley was down 2.9 percent, and Goldman Sachs was down 2.7 percent.
Dimon said the type of trading that led to the $2 billion loss would not be banned by the so-called Volcker rule, which will ban certain types of trading by banks with their own money.
The Federal Reserve said last month that it would begin enforcing that rule in July 2014.
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