Senator Calls For Hearing On JPMorgan Loss
May 14, 2012 by UPI - United Press International, Inc.
WASHINGTON (UPI) — The massive trading losses that shook JPMorgan Chase claimed its first victim Monday with the resignation of Chief Investment Officer Ina Drew.
Drew, a 30-year veteran of the banking giant, oversaw the department that lost $2 billion to $3 billion in derivatives trading in just six weeks.
“Ina Drew has been a great partner over her many years with our firm. Despite our recent losses in the CIO [chief investment office], Ina’s vast contributions to our company should not be overshadowed by these events,” said Jamie Dimon, chairman and chief executive officer, who spent the weekend apologizing for what he termed “a terrible, egregious mistake.”
The resignation came as calls mounted in Congress for an investigation.
Sen. Bob Corker, R-Tenn., has requested a hearing.
“I’d like to be dealing with reality instead of myth and perception,” said Corker, who serves on the Senate Banking Committee and was a central figure in negotiations over the Dodd-Frank financial overhaul bill.
“I just want to make sure we have a good policy outcome here,” the Los Angeles Times quoted Corker as saying.
Sen. Carl Levin, D-Mich. — a proponent of the so-called Volcker rule, limiting bank risk-taking, and other aspects of the Dodd-Frank Wall Street overhaul — was asked on NBC’s “Meet the Press” Sunday what price JPMorgan should pay for a massive trading bet that resulted in the huge losses.
“The price will be that they will lose their battle in Washington to weaken the [Volker] rule — that is the real price,” he said. “In terms of past activities, that’s in the hands of people who are assessing whether or not there was any criminal wrongdoing.”
The Wall Street Journal reported Monday the firm was prepared for a total loss of more than $4 billion over the next year, though with a market rebound, the losses could be reduced.
Dimon told NBC “Meet the Press” Sunday he was “dead wrong” April 13 when he said concerns about reported problems with the London unit doing the highly risky trades were “a complete tempest in a teapot.”
JPMorgan also began investigating whether London traders hid the extent of losses on credit derivatives positions, the Financial Times reported Monday.
Dimon faces shareholders at the bank’s annual meeting in Florida Tuesday.
JPMorgan Chase is the largest U.S. bank, holding more than $2.3 trillion in outstanding loans and other assets, and employs 240,000 people in 60 countries.
Levin said Friday the bank’s trading losses were a “textbook illustration” of why Wall Street needed tougher regulation.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted by Congress two years ago in response to the Great Recession and related financial crisis, brought the most significant changes to U.S. financial regulation since regulatory reform after the Great Depression of the 1930s.
Others expected to depart the bank are Bruno Michel Iksil, who headed the London trading team and was known as the “London whale” for big positions he took in credit markets, and Javier Martin-Artajo, another member of the team, the Journal and the other newspapers said.
Drew, the bank’s chief investment officer and a close Dimon associate, has been a longtime star at the bank who made $15.5 million last year, a regulatory filing indicated, and was listed at No. 8 on Fortune magazine’s 2011 list of highest-paid businesswomen.