JPMorgan and Morgan Stanley: Finagling Accounting Profits

JP Morgan Chase (JPM) has announced $3.3 billion in earnings for the first quarter of 2010. This amounted to $0.75 a share, handily beating the consensus estimate of $0.64 a share. In the conference call (see transcript here), CEO Jamie Dimon made uncharacteristically optimistic forward looking statements. Looking closer, nearly half of the gain is from accounting changes, resulting in a reduction of provisions for future loan losses ($8.6 billion reduced to $7.0 billion), and a reduction in provisions for future credit card losses. JPM reported strong gains in investment banking and trading, which more than offset the $1.6 billion in real estate and credit card losses. The Associated Press has a good summary article on the JPM quarterly report. On the other side of the ledger, Daniel Thomas, at FT.com, reports that investors of Morgan Stanley's (MS) real estate fund have been advised to expect losses of up to 61%:[INDENT]Morgan Stanley has warned investors that an $...