Top JPMorgan Exec To Resign Monday Over Huge Losses

By: From CBS News, Posted by Ralph Hipp
By: From CBS News, Posted by Ralph Hipp
JPMorgan Chase is expected to accept the resignation of Ina Drew, its chief investment officer, on Monday, after the reported loss of $2 billion in credit derivatives announced by CEO James Dimon.

**FILE** In this Jan. 16, 2008 file photo, a customer leaves a branch of Chase Bank in New York. JPMorgan Chase reported a 53 percent profit decline Thursday as defaults rose in mortgages and other loans, but the bank's results were better than the market anticipated. (AP Photo/Mark Lennihan, file)

NEW YORK (CBS News) -- JPMorgan Chase is expected to accept the resignation of one of the highest-ranking women on Wall Street after the bank lost $2 billion in a trading blunder, a person familiar with the matter said Sunday.

The bank will accept the resignation of Ina Drew, its chief investment officer, the person told The Associated Press, speaking on condition of anonymity because the person was not authorized to discuss the decision publicly.

Drew is one of the highest-paid officials at JPMorgan Chase, and one of the top women involved in Wall Street market activity. She had offered to resign several times since CEO Jamie Dimon disclosed the trading loss on Thursday, the person said. Pressure built on the bank over the weekend to accept.

At least two other executives at the bank will be held accountable for the mistake, the person said.

Earlier in the day, CEO Jamie Dimon called the trades "a terrible, egregious mistake." He also acknowledged the Security and Exchange Commission is investigating whether rules were broken.

"We know we were sloppy. We know we were stupid. We know there was bad judgment. We don't know if any of that is true yet. And of course regulators should look at something like this. That's their job so we are totally open to regulators and they will come to their own conclusions," Dimon said. "We took far too much risk, the strategy that we had was barely vetted, it was badly monitored. It should never have happened."

Michael Greenberger, a former Wall Street regulator and current law professor, said it should come as little surprise that smart, savvy bankers like Dimon made mistakes like this.

"These kinds of transactions are as complex as they are risky. And it's very difficult for anybody really to understand what's going on. I think (in) the end (it will be) shown the trader himself didn't understand what was going on," Greenberger said.

Part of the problem is not just understanding these trades.

"These traders are given enormous discretion without proper supervision or Understanding, and you end up with these enormous losses," Greeneberger said.

The sweeping financial reform bill that was passed in the wake of the last financial crisis - the Dodd-Frank bill - would have had safe guards in place to prevent these trades, had they been implemented, Greenberger said.

"This kind of trade would have been banned" under a fully-implemented Dodd-Frank, Greenberger said. "JP Morgan Chase has been arguing that these kinds of trades should go forward. But (some of the rules) on Dodd-Frank, the way they were written, these kinds of risky, complex trades would be banned."

What's scary about the situation is how likely it is to happen again.

"Of course it could happen at another bank next week," Greenberger said. "JP Morgan Chase and Jamie Dimon are the brightest guys in the room. If they have this problem, god knows how many other people have these problems. And this could lead us right back to where we were in 2008.

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