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JP Morgan Investment Boss Ina Drew Quits Over Bank's $2 Billion Investment Losses
2012-05-14 15:47:06 (228 weeks ago)
Posted By: Intellpuke

Ina Drew, a thirty-year veteran of JP Morgan Chase and one of Wall Street's most senior women bankers, has quit, as the bank fights to contain massive losses at its London operation.

Jamie Dimon, JP Morgan's chief executive, said Sunday there was "no excuse" for the disastrous series of bets it made under the guidance of Drew, the chief investment officer.

Drew, 55, was one of the bank's highest-paid employees, and earned over $31 million in the past two years. Among other responsibilities as chief investment officer (CIO), she oversaw the bank's London offices, and the trading strategy that led to trader Bruno Iksil becoming known as the "London Whale" for the massive positions he was taking.

The bank said Drew will retire. It made no mention of her severance package. U.S. law allows banks to claw back bonuses from executives when it discovers that their trades have backfired.

Dimon praised Drew's contribution to the bank. "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," he said in a statement.

Until this week the low profile mother of two was viewed as one of the most powerful women on Wall Street. She became CIO in 2005 and was a close confidante of Dimon's, frequently making lists of the most powerful women in business. She was known as a mentor of other women within the bank.

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Matt Zames, currently co-head of investment bank's global fixed income unit and head of capital markets, will succeed Drew, said JP Morgan.

JP Morgan is still weighing the fate of Iksil and other traders. Iksil has been suspended from trading and is currently at home in Paris. Achilles Macris, in charge of the London-based desk that placed the trades, and trader Javier Martin-Artajo, a managing director on Macris' team, are also expected to leave.

In London, rumors were spreading that workers in the bank's chief investment office, where the losses occurred, are at risk of dismissal. The bank did not return calls for comment.

Drew's trading strategy was meant to shield the bank from the ongoing European financial crisis, and involved a series of complicated investments in credit derivatives.

The size of the bank's investments rattled investors and analysts earlier this year. In April, Dimon dismissed those concerns in a conference call with analysts. Asked about the London Whale, Dimon said: "It's a complete tempest in a teapot. Every bank has a major portfolio and in those portfolios you make investments to offset exposures. Obviously it is a big portfolio we are a large company."

When he announced the loss on May 10, Dimon called the firm's handling of the situation "flawed, complex, poorly reviewed, poorly executed and poorly monitored."

Despite Drew's departure and the likelihood of more to come, pressure remains on Dimon. Regulators on both sides of the Atlantic are now investigating the losses, shareholders are threatening to sue, and in Washington politicians are calling for new regulations to be tightened, regulations of which Dimon has been a vocal critic.

Regulators are currently drafting the so-called "Volcker rule", which would limit the types of trading banks are allowed to undertake. Over the weekend, U.S. Senator Carl Levin, co-author of the rule, said Wall Street had successfully watered down the rule.

Levin said the enormous loss at JP Morgan was a prime example of why the rule had to be enforced in its original format.

"The issue here is the power of the banks and whether or not we are going to put a cop back on Wall Street," he told NBC's Meet The Press.

"The issue is whether we are going to stick with the law as written, which will prevent us from bailing out banks again."

Intellpuke: You can read this article by Guardian U.S. Business correspondent Dominic Rushe in context here:

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