Simon Dawson/Bloomberg News
JPMorgan Chase’s London offices, center left. The bank disclosed that trading there was responsible for $2 billion in losses.
By NELSON D. SCHWARTZ and JESSICA SILVER-GREENBERG
Published: May 13, 2012
Stung by a huge trading loss, JPMorgan Chase will replace three top traders starting Monday, including one of the top women on Wall Street, in an effort to stem the ire that the bank faces from regulators and investors.
Related
Dimon Says JPMorgan Made an ‘Egregious Mistake’ (May 14, 2012)
Fair Game: At JPMorgan, the Ghost of Dinner Parties Past(May 13, 2012)
JPMorgan Sought Loophole on Risky Trading (May 12, 2012)
DealBook: JPMorgan Discloses $2 Billion in Trading Losses (May 10, 2012)
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Reuters
Jamie Dimon, chief executive of JPMorgan Chase, said on “Meet the Press” that the bank had been “sloppy” and “stupid.”
They are the first departures of leading officials since Jamie Dimon, the chief executive, disclosed the bank’s stunning $2 billion loss on Thursday.
The huge scope of the complex credit bet caught senior bank officials off-guard when it began to sour last month and has set off renewed regulatory scrutiny of the industry. Mr. Dimon has largely sidestepped blame for the loss, although he has offered numerous apologies for the blunder, the biggest of his eight-year tenure at JPMorgan, the nation’s largest bank.
Ina Drew, a 55-year-old banker who has worked at the company for three decades and is the chief investment officer, has offered to resign and will step aside Monday, said several bank executives who would not speak publicly because the resignations had not been completed.
Her exit would be a precipitous fall for a trusted lieutenant of Mr. Dimon. Last year, Ms. Drew earned roughly $14 million, making her the bank’s fourth-highest-paid officer. From her desk in Manhattan, she oversaw the London office that assembled the trade, a growing unit that oversees a portfolio of nearly $400 billion. Two traders who worked for Ms. Drew are also likely to leave shortly. Ms. Drew was not available for comment.
Mr. Dimon, who will face shareholders at the company’s annual meeting Tuesday, has been on a public campaign of contrition in recent days. Mr. Dimon, the famously confident, even cocky, executive, repeated his apologies in a broadcast Sunday of NBC’s “Meet the Press.”
“We made a terrible, egregious mistake and there’s almost no excuse for it,” Mr. Dimon said, adding that the bank was “sloppy” and “stupid.” He also acknowledged that the timing of the loss was a gift for advocates of more stringent regulation.
Ms. Drew had tearfully offered to resign multiple times since the scale of the loss became apparent in late April, but Mr. Dimon had held off until now on accepting it, said people familiar with the situation.
A skilled trader who once said she relished a crisis, Ms. Drew — and the disastrous trade — had become a liability for the firm, whose announcement of the trading loss caused JPMorgan’s shares to plunge 9.3 percent on Friday. It was unclear what type of severance package Ms. Drew will receive.
“It’s not surprising that officials there are taking the fall, but this is one of the fastest movements I have seen,” said Michael Mayo, an analyst with Credit Agricole Securities in New York. “Mr. Dimon gets an A for moving to stem the wrath of regulators, but an F for not finding the problem in the first place.”
With the furor intensifying, former JPMorgan executives said, Ms. Drew was clearly feeling pressure to step down, especially with regulators and members of Congress pointing to the loss as an example of why tighter oversight of the nation’s biggest financial institutions is needed.
“The bank has taken bigger losses in investment banking and elsewhere, but because of the timing, she is being piled upon as this huge failure,” said a former senior executive, who spoke on the condition of anonymity because of the delicate nature of the situation.
Executives said that within the last several months, Ms. Drew told traders at the bank’s chief investment office to execute trades meant to shield the bank from the turmoil in Europe. Ms. Drew thought those bets could protect the bank from losses and even earn a tidy profit, these employees said.
But when market tides abruptly shifted in April and early May, Ms. Drew’s instructions to traders to trim what had become a gigantic bet came too late to avoid racking up losses that could eventually exceed the current $2 billion estimate. Within the bank, there is also ample frustration that instead of reducing the losses, Ms. Drew’s traders may have worsened them.
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