JPMorgan makes top level changes as Drew resigns
WASHINGTON - JPMorgan Chase's chief investment officer Ina Drew has resigned after the banking corporation revealed losses of $2billion due to a trade involving derivatives that was intended to lower, or hedge, the bank's risk but which went terribly wrong.
Drew is the first casualty after the bank suffered trading losses that have sparked an investigation by U.S. securities regulators.
In a statement Monday, the bank said Drew "has made the decision to retire" after working with the firm after more than 30 years.
She will be succeeded by Matt Zames, co-head of Global Fixed Income in the Investment Bank and head of Capital Markets within the Mortgage Bank.
Daniel Pinto, currently co-head of Global Fixed Income with Matt, will become sole head of the group. Daniel will also remain CEO of our Europe, Middle East and Africa region, based in London.
In addition, Mike Cavanagh, CEO of the Treasury Securities Services (TSS) group, has been put in-charge of a dedicated team of senior executives to oversee and coordinate the firm wide response to the recent losses in the Chief Investment Office.
"Ina Drew has been a great partner over her many years with our firm. Despite our recent losses in the CIO, Ina's vast contributions to our company should not be overshadowed by these events," said Jamie Dimon, Chairman and CEO.
The botched trade, which Dimon admits was "sloppy" and "stupid," provides fresh ammunition to pro-regulation Democratic lawmakers, economists, securities lawyers and money managers.
Seen as the latest proof that banks can't police themselves and that their trading risks still pose a threat to the financial system and economy, the critics stress that regulators must heed the latest wake-up call and place tighter restraints on banks' in-house trading activities.
The White House said Monday that JPMorgan Chase's admission last week that it lost more than $2 billion in one set of trades is reason to continue to push for stronger, not weaker, regulation of the nation's financial system.
"It's so important that we resist the efforts of Republicans and Wall Street lobbyists" to water down the 2010 rewrite of the rules of Wall Street, White House spokesman Jay Carney told reporters aboard Air Force One, reported CBS News.
"It is amazing, given the events we've seen the last few days that there are still those who are out there arguing that we should repeal Wall Street reforms, that we should let Wall Street write its own rules again," Carney said.
Critics say a clampdown on risk and the passage of stricter rules with more teeth and fewer loopholes are needed to avoid a bank blowup similar to the one that caused financial markets to melt down in 2008-09.
Lawmakers pushing for tougher rules now have more sway in the debate, says SP Capital IQ analyst Erik Oja, who fears it could lead to more stringent rules.
The Federal Reserve, the Securities and Exchange Commission and other regulators are currently tweaking rules to spell out precisely what types of trading banks are, and aren't, allowed to engage in.
The law takes effect this summer, but banks have until July 21, 2014, to be in full compliance.
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