Surprise losses on JPMorgan Chase & Co.'s synthetic credit portfolio have racked up $2 billion in mark to market losses, the bank reported late Thursday.

The synthetic credit positions — which still remain open — were supposed to function as a hedge but "were flawed, complex, poorly executed, poorly designed, and poorly monitored," Chief Executive Officer Jamie Dimon said on a conference call Thursday afternoon.

The risk management failure occurred in the bank's Chief Investment Office, the bank said. The office's mistakes have been offset in part by the bank's unrelated $1 billion gain in the available-for-sale securities portfolio.

"These were egregious mistakes, self-inflicted," Dimon said. "This not how we want to run a business."

Dimon said the bank had undertaken an "extensive review" of its mistakes, and has already changed certain policies and procedures. He said that his management team had made an error by not catching on earlier to smaller trading losses.

The bank's positions remain highly volatile and could still produce further losses, Dimon said. While he would not quantify the range of exposure, he said that $1 billion swing was fully plausible and that "we're not going to update every time that number moves around a half billion dollars."

Dimon referenced press reports several times during the call. According to a Bloomberg story last month, the chief investment office took a large position in credit default swaps — large enough to move the market, forcing hedge funds that had made opposing bets on the same corporate credits to make margin calls. The trader in the office was nicknamed "the London Whale" for the impact he had.

Because abruptly exiting the CIO's synthetic positions would make the bank's losses worse, Dimon said, the bank intends to retain the exposure. This will result in a significant increase in the bank's Value at Risk, a metric which states how much the bank is likely to gain or lose on any given day. It has doubled, from $67 million to $129 million.

"We're going to manage this for economic value, and not panic or do anything stupid," Dimon said. "We've got staying power. … We're willing to bear volatility."

Dimon said he was optimistic that the volatility will have subsided by the end of the year.

More than one analyst on the call noted the awkward timing of the news, given that JPMorgan and other banks are sparring with regulators over limits on proprietary trading.

During the call, Dimon referred to the CIO's position as a hedge, though in discussing it he noted that it had been designed in part to make money for the company. Originally, the position produced profits.

"I know it was done with the intention of hedging the tail risk of JPMorgan," he said. "But it morphed over time."

Dimon conceded that the bank's mistake would likely be used to bolster the case of those in Washington seeking to rein in its trading.

"It is very unfortunate that it plays right into the hands of a bunch of pundits out there, but that's life," he said. "We'll have to deal with that."