JPMorgan Chase: Loss to force three executives to resign?
JPMorgan Chase loss of $2 billion has caused Chief Investment Officer Drew to tender her resignation, a source says. Two of her subordinates involved in the JPMorgan Chase loss are also expected to resign.
JPMorgan Chase & Co is expected this week to accept the resignation of Chief Investment Officer Ina Drew after the bank lost $2 billion or more with a failed hedging strategy using derivatives, sources close to the matter said on Sunday.Skip to next paragraph
Subscribe Today to the Monitor
Two of Drew's subordinates who were involved with the trades, Achilles Macris and Javier Martin-Artajo, are expected to be asked to leave, according to the people familiar with the matter.
Drew had repeatedly offered to resign after the bank discovered that its portfolio of derivatives tied to bonds was rapidly losing money and had grown too big to be quickly unwind, according to one of the sources. But the resignation was not immediately accepted because of her past performance at the bank.
Until the $2 billion loss was disclosed on Thursday night, Drew was considered in the industry to be one of the best managers of balance sheet risks.
She is one of the highest paid executives at JPMorgan, earning more $15 million in each of the last two years.
"Ina is an amazing investor," said a money manager who knows Drew, but who declined to be quoted by name. "She's done a really good job over a lot of years. But they only remember your last trade."
CEO Jamie Dimon said when he announced the loss on Thursday that the bank was continuing to investigate what went wrong and that disciplinary actions would be taken.
Dimon called the handling and oversight of the derivative portfolio "sloppy" and "stupid."
Earlier on Sunday, Dimon said in a nationally-televised interview that bank executives had reacted badly to warning flags last month that it had large losses in financial derivatives trading.
In the interview on NBC's "Meet the Press" television program, Dimon said bank executives were "completely wrong" in public statements they made in April after being challenged over the trades in media reports.
"We got very defensive. And people started justifying everything we did," Dimon said. "We told you something that was completely wrong a mere four weeks ago."
The loss, and Dimon's failure to abide the warnings, have become major embarrassments and have given regulators new arguments for tightening controls on big banks and requiring them to hold more capital to cushion possible losses.
The comments to NBC were Dimon's first public statements since he spoke to analysts in a conference call on Thursday. He is scheduled to speak again on Tuesday at the company's annual meeting in Tampa, Florida.