On today's enjoyable-as-always earnings call, Jamie Dimon was not ashamed to confess that the Volcker Rule has not yet made its way to his pile of bedside reading material. Understandable! Also, he thinks it's anti-American. Unsurprising!
Dimon may not be sweating the Volcker details because he thinks that everyone will eventually wake up and figure out the whole anti-American thing and the Volcker Rule will never actually be implemented as proposed. And he'll do what he can to make that happen. In response to a question from Jason Goldberg at BarCap asking him to quantify the effects of the Volcker Rule on JPMorgan, he said that it's early going on the rule and "let's let it work through the process." That process could include some Dimon-directed lobbying, as he told the analysts on the call that they'd better get their shit together to send in anti-Volcker-Rule comments by the January deadline: "I hope you understand how important this is not just for your own business but for the United States."
Meanwhile, in another part of the income statement, JPMorgan made much of its money the old-fashioned way, by booking a $1.9bn DVA gain. This measures the fact that JPMorgan liabilities, including in particular structured notes and derivatives payables, are worth less than they used to be because JPM's credit spreads, like other banks' spreads, have blown out this quarter. So JPMorgan had a $1.9bn accounting profit that (1) doesn't bring them actual money and (2) is due to their own credit getting worse. And as JPMorgan points out, if their credit spreads get tighter in the future, they'll have to report a loss as they back out the DVA.
Unless, of course, they do something to monetize it. Like buying in some of the structured notes that account for much of the DVA. (JPMorgan has finished its share repurchase program, at about a $400mm mark-to-market loss, and doesn't have immediate plans to do more - maybe the next profiting-on-declines target is the structured notes?) Or like selling CDS on correlated banks.
Some idle speculation linking those two: the Volcker Rule will prohibit banks from speculating on their own account, but will allow exceptions for hedging risks that banks actually face. If JPM is in fact hedging a DVA reversal by selling correlated CDS, that would not be a hedge against any "actual" risk facing JPMorgan (just a phantasmal accounting risk), but it would increase correlation of banks' default risks: the worse JPMorgan's credit gets, the more protection it's selling on Goldman Sachs to crystallize its DVA gains. That seems like the sort of non-hedging systemically risky proprietary trading that ... wasn't someone trying to do something about that?