Andrew Feldstein is the co-founder of BlueMountain Capital Management LLC and a former JPMorgan Chase & Co. (NYSE:JPM) executive. BlueMountain Capital is a hedge fund with over $8 billion under management.

Now Mr. Feldstein is returning to his old firm to help them get out of the trades which have cost the firm over $2 billion and a lot of grief.  Feldstein helped create the credit derivatives market at JPMorgan Chase & Co. (NYSE:JPM) so it is likely that he will know how to disarm these trades and finally get JPMorgan back on the right track. Mary Childs, Stephanie Ruhle and and Shannon D. Harrington of Bloomberg first reported the news last night.

JPMorgan was essentially using BlueMountain as a middleman to help them unwind the large trades.  As we can tell by the large trading volume over the past three weeks, the investment bank has been working on unloading those trades which has sparked a sell off of the company’s stock and the bank’s CEO testifying before Congress, twice.

A spokesperson for BlueMountain declined to comment on the issue, as well as their public relations firm, Dukas Public Relations.

From a value investor’s perspective, JPMorgan Chase & Co. (NYSE:JPM) was hit way too hard.  The company lost 35% of its market cap after the bad trades were announced.  That is an overreaction if I have ever heard of one.  First off, $2 billion is a drop in the bucket for the bank.  It is not like the bank isn’t going to make money this year.  There should have been no reason for the huge sell off that we saw.  However, if you are a value investor, you look for these sorts of disproportions because this is how you are able to make a nice profit once a stock resumes an uptrend.

Dimon has been taking heat from Washington since the CEO has testified twice before Congress now.  The Senators did more grilling during the second testimony but Dimon was able to blame growth –killing regulation and government interference as the real stress on the banks.  It is unknown whether the US government is looking to try to implement new regulation but it will be interesting to see if any new regulation does come out and whether it hurts banks or not.

The bottom line here is that JPMorgan was hit hard and still being hit hard by the faulty trades that were revealed early May.  The bank finally is able to find help in BlueMountain to unwind the trades that have been causing so many problems.  Additionally, it is unknown whether the US government is looking to add more regulation to the banking community which is widely disagreed with.