SHORT AND DISTORT.(Brief Article)

Publication: The New Yorker

Publication Date: 12-AUG-02

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COPYRIGHT 2002 All rights reserved. Reproduced by permission of The Condé Nast Publications Inc.

For J. P. Morgan Chase, the trouble started on Monday, July 22nd, when a Senate subcommittee raised questions about the role that the bank, along with other institutions, played in helping Enron set up a "maze of financial transactions that . . . makes Rube Goldberg look like a slacker." Investors, keenly aware of what helping Enron had done for Arthur Andersen, began dumping J. P. Morgan stock. Things got worse the next day, when rumors--of criminal prosecution, huge fines, a bad bet on gold--started to circulate in the market. The stickiest of them maintained that the bank had suffered giant losses in its derivatives business and that the Federal Reserve had held an emergency meeting to address the potential fallout. Never mind that these vague scenarios lacked sense (and, as it turned out, substance). They rippled across trading floors and surfaced on the Web, giving rise to the...

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