SecProbe.io

June 15, 2011

Via E-mail
Douglas L. Braunstein Executive Vice President and Chief Financial Officer JPMorgan Chase & Co. 270 Park Avenue New York, NY 10017
Re: JPMorgan Chase & Co.
 Form 10-K for Fiscal Year Ended December 31, 2010  Filed February 28, 2011  Form 10-Q for Fiscal Quarter Ended March 31, 2011  Filed May 6, 2011
File No. 001-05805

Dear Mr. Braunstein:
 We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us w ith information so we may better understand
your disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested response.  Where we have requested  changes in future filings, please include a
draft of your proposed disclosure s that clearly identifies new or  revised disclosures.  If
you do not believe our comments apply to your facts and circumstances or do not believe
an amendment is appropriate, please tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to these comments, including the dr aft of your proposed disclosures, we may
have additional comments.     Form 10-K for Fiscal Year Ended December 31, 2010

 Business, page 1

 Recent Events Affecting the Firm, page 1

1. We note your disclosure, here as well as other locations in your filing, regarding
the impact of the Dodd-Frank Act and in pa rticular the “Volcker Rule”.  We also

Douglas L. Braunstein
JPMorgan Chase & Co. June 15, 2011 Page 2
 note your disclosure that principal transact ions revenue consists of private equity
gains and losses, realized and unrealized gains and losses from trading activities
(including physical commodities inventorie s that are generally accounted for at
the lower of cost or fair value), changes in fair value associated with financial
instruments held by IB for which the fa ir value option was elected, and loans
held-for-sale within the wholesale lines of  business.  Further, it appears there may
be similar activities reported in other line  items and segments.  It is not clear how
much of this revenue was generated from  your proprietary trading business, hedge
fund activity, and private equity funds that would be affected by the Volcker
Rule.  We believe that a separate disc ussion of your proprietary trading, hedge
fund and private equity fund sponsorship  and investing activities, including
quantification of revenues fr om such activities, will provide readers with useful
information regarding the significance of  these activities on your historical
financial statements and the impact that  the Volcker rule and its limitations on
certain activities is e xpected to have on your business going forward.
Accordingly, please tell us, and revise future filings, to address the following:

 Clearly disclose how you define “propr ietary trading” for these purposes.

 Identify the trading desks and other rela ted business units that participate in
activities you believe meet the definiti on of proprietary trading. Identify
where these activities ar e located in terms of your segment breakdowns.
Quantify the gross revenues and operating margin from each of these units. We note your disclosure on page 59 of  your Form 10-K for the year ended
December 31, 2010 that you have liquidated your positions within Principal Strategies in your former Equities operati ng segment.  It is not clear if this
was the extent of your proprietary tradi ng business.  Please clarify if there are
other proprietary trading bus inesses.  If there are, please clearly identify the
extent to which such activities or bus iness units have been terminated or
disposed of as well as the steps you plan to take to terminate or dispose of the
rest of these components.
 Revise your future filings to clearly id entify aspects of your business that are
similar to but excluded from your defini tion of “proprietary trading” for these
purposes. Clearly disclose how you differe ntiate such activities. Tell us the
extent to which you believe it is possibl e that such activit ies will be scoped
into the final regulatory defin ition of proprietary trading.

 Clearly disclose how you define “hedge fund” and “private equity fund” as
well as “sponsorship” and “investing”  for the purpose of determining the
limitations on your activities in  these respective areas.

 Identify the business units that sponsor or invest in private equity or hedge
funds.  Identify where these activities are located in term s of your segment
breakdowns.  Quantify the gross revenues,  operating margins, total assets, and

Douglas L. Braunstein
JPMorgan Chase & Co. June 15, 2011 Page 3
 total liabilities associated with your sponsorship and investments in private
equity and hedge funds.  Clearly identif y the extent to which such activities
have been terminated or disposed of as  well as the steps you plan to take to
terminate or dispose of the rest of these components.

Item 1A: Risk Factors, page 5

2. The introductory paragraph states that the “discussion sets forth some of the more
important risk factors…” and that “factor s besides those discussed below, MD&A
or elsewhere in this report or other reports that JPMorgan Chase filed or furnished
with the SEC, also could adversely affect the Firm.”  Please note you should identify and discuss all risk factors th at you believe are material in the “Risk
Factor” discussion and should not caution ag ainst risks that are not identified or
that are disclosed elsewhere.  For exampl e, please include separate risk factors
discussing the potential e ffects of the following:

 Basel III effects on your products and pricing;
 The Durbin amendment;
 A requirement that mortgage originator s hold a percentage of the risk of
the loans they make; and
 The Volker Rule.

We note the disclosure in “JPMorgan Ch ase operates within a highly regulated
industry and the Firm’s business and result s are significantly affected by the laws
and regulations to which it is subject, including recently-adopt ed legislation and
regulations,” and believe a more detailed discussion is necessary.  To the extent
that the effect on your revenues cannot be determined, please quantify the
revenues that will be affected such as  revenues generated from debit card
interchange fees.
 If JPMorgan Chase does not effectively mana ge its liquidity, its business could suffer,
page 5

3. Please disclose that Moody’s and S&P’s outlook is negative and quantify the
likely effect of a one and two not ch downgrade in credit rating.
  JPMorgan Chase’s commodities activities ar e subject to extensive regulation…, page 9

4. We note your disclosures on page 9 that you engage in the storage, transportation,
marketing or trading of several commodities, including metals, agricultural products, crude oil, oil products, natural gas, electric power, emission credits,
coal, freight, and related products and indices.  You also engage in power
generation and have invested in wind  energy and in sourcing, developing, and
trading emission reduction credits.  Please respond to the following:

Douglas L. Braunstein
JPMorgan Chase & Co. June 15, 2011 Page 4

 Please tell us in greater de tail the type of commoditi es that you invest in, the
activities that go into making a market in these commodities and the types of
revenue streams earned as a re sult of these activities.

 Tell us how you obtained your ownership in the various power generation
facilities you own, and tell us whethe r this is an area where you are
considering further investments.
 Tell us how and where the results of  your ownership interest in power
generation facilities are reflected in your consolidated financial statements,
including the amounts involved.
 Describe the relationship between your market making activities in various
commodities and your ownership in  power generation facilities.
 Management’s Discussion and Analysis, page 54

 Executive Overview, page 55

5. Please quantify the reductions in the allowa nce for credit losses in Card Services,
Retail Financial Services, the Investme nt Bank, Commercial Banking and in the
aggregate.  Please also include a risk fact or clearly disclosing th at the reduction in
the allowance for credit losses is a signifi cant driver of net income and that this
level of net profit may not be sustainable.
 Repurchase Liability, page 98

6. You state on page 99 that “The Firm ac tively reviews all resc ission notices from
mortgage insurers and contests them when  appropriate.”  You disclose on page
100 “During 2010, the Firm’s overall cure  rate, excluding Washington Mutual
loans, has been approximately 50%.”  This cure rate appears to apply to
repurchase requests not rescission notices.  Please tell us and consider disclosing
your success rates in getting the mortgage insurers to reinstate coverage due to
lack of a contractual breach.  Explain th e extent to which your success rate in
curing rescission notices is ultimately f actored into your overall cure rate as
disclosed on page 100.

7. You disclose on page 101 that “The Firm  has entered into agreements with two
mortgage insurers to resolve their claims  on certain portfolios for which the Firm
is a servicer. The impact of these agre ements is reflected in the repurchase
liability and the disclosed outstanding mort gage insurance rescission notices as of
December 31, 2010.”  In order to provide context for the reader to understand the extent of remaining rescission risk beyond that which has been limited by your
settlements with the two insurers, please revise to provide qu antification of the

Douglas L. Braunstein
JPMorgan Chase & Co. June 15, 2011 Page 5
 remaining exposure to the remaining mortga ge insurers compared to the exposure
which has been settled.

8. We note your disclosure that in certain data points you exclude mortgage insurers
because they themselves do not present repurchase demands to the firm.  Please revise your future filings to  clarify how and to what extent mortgage insurance
rescissions impact your liability for represen tations and warranties.  In this regard,
please address the following:

 Disclose and discuss the statistics on the percentage of mortgage insurance
rescissions that actually resu lt in repurchase demands.

 Disclose more clearly whether the holder of the mortgage is also aware of the
mortgage insurance rescission, as well as whether you have an obligation to
report the mortgage insurance rescissi on to the purchaser of the mortgage.

 Disclose when and how you establish reserves for mortgage insurance
rescissions, particularly where ther e is not yet a repurchase demand.
 Wholesale Credit Exposure – Sele cted Industry Exposures, page 121

9. We understand based on various disclosure s throughout your filing that you have
exposure to municipalities through direct investment s in both municipal bonds
and auction rate securities, as well as through your sponsorship of municipal bond
securitization vehicles.  We  also understand that you ma y have involvement with
municipalities as the underwriter of bond offerings, as a provider of guarantees
(typically letters of credit), and other aspects.  Please pr ovide us with an analysis
that summarizes and quantifies your various  exposures (both direct and indirect)
to state and local municipalities.  Please  also consider provi ding this type of
disclosure in your future filings to more  clearly identify and summarize any risk
concentration in this industry.
 Country Exposure, page 128

10. We note your disclosure on page 128 regard ing your credit exposures to certain
European countries, including Greece, Po rtugal, Spain, Italy and Ireland which
are less than $15 billion a nd $20 billion in aggregate at December 31, 2010 and
March 31, 2011 respectively.  Further, pl ease revise your disclosures regarding
such exposures to clarify how you consid ered your derivatives contracts in
computing the amount of exposure disclose d here.  For example, clarify whether
you considered derivatives where the counter party is domiciled in that country, as
well as CDS written or purchased to ec onomically hedge debt issued by that
country or for companies with debt domic iled in that country.  Specify whether
you include all OTC derivatives or  just credit derivatives.

Douglas L. Braunstein
JPMorgan Chase & Co. June 15, 2011 Page 6
 Modifications of Credit Card Loans, page 137

11. You disclose on page 137 that “Based on the Firm’s historical experience, the
Firm expects that a significant portion of the borrowers will not ultimately comply with the modified payment terms.”  Pleas e revise your future filings to quantify
the redefault rate of modified credit ca rd loans for the periods presented.
 Market Risk Management, page 142

 12. We note your disclosure on page 142 that you use historical changes in market
values.  Please more clearly describe in  future filings the method used (i.e.,
parametric, historical, full valuation, etc. ) and the level or number of market
factors used when calculating Value-at-R isk (or VaR) as presented throughout
this section.
 Consolidated Financial Statements

 Notes to Consolidated Financial Statements

Note 7 – Noninterest Revenue, page 199

13. We note your disclosure elsewhere of th e principal transactions revenue by
reporting segment.  Please respond to the following and expand your disclosures
in future filings to address the following:

 Tell us and expand your disclosures to pr ovide further discussion of the types
of instruments that generate the princi pal transaction revenu e by type of risk
and how those instruments affect the financial statement line items.  For
example, discuss how interest rate cont racts generate trading revenue (changes
in fair value which reflect X line item, and fee charged to customer, which affects X line item, etc).
 Describe the significant drivers of the principal transactions revenue.  For
example, discuss how much of the reve nue is driven by transaction fees (if
classified here) versus changes in fair value of the instruments.

 Tell us in more detail how principal transactions revenue is generated by
customer demand, the steps you take to f ill the order, and how the associated
revenue line items are affected.  For exam ple, if a customer requests a foreign
exchange swap, discuss the types of fees charged for the transaction, and
whether the principal transactions re venue you would recognize is the other
side of the swap transaction that the customer requested.

 Describe the types of pr incipal transactions reve nue streams recognized from
structured credit products, which are include d as part of credit  derivatives.

Douglas L. Braunstein
JPMorgan Chase & Co. June 15, 2011 Page 7

Note 14 – Loans, page 220

14. You disclose on page 220 that “Consumer  loans, other than risk-rated business
banking and auto loans and PCI loans, are generally charged off to the allowance
for loan losses upon reaching specified stag es of delinquency, in accordance with
the Federal Financial Institutions Exam ination Council (“FFIEC”) policy.”  Tell
us and disclose more clearly in futu re filings why you tr eated auto loans
differently than your other consumer loan s in terms of developing your charge-off
policy.  Clarify whether you view auto loans as homogeneous pools for purposes
of evaluating their risk char acteristics for determining when to charge-off a loan.
Identify the upper limits of the time fra me by which you typically charge-off auto
loans.

15. We note from your disclosure on page 222 that you identified  three portfolio
segments, Wholesale, Consumer, excludi ng credit card, and Credit card.  In
addition, we note that a segment is defi ned in ASU 2010-20 as the level at which
you develop and document a systematic methodology to determine your allowance for credit losses.  Given the uni que char