JPMorgan CIO retires, Obama says proves reform case
By Matt Scuffham and David Henry
LONDON/NEW YORK (Reuters) - The leader of JPMorgan Chase & Co's hedging unit is retiring after trading losses that could end up exceeding $3 billion, a shortfall that President Barack Obama said might have led the government to step in had such losses struck a smaller bank.
The Federal Reserve meanwhile said it is now looking into whether JPMorgan has similar risk problems at other units, joining a probe by the U.S. Securities and Exchange Commission and upcoming hearings in the U.S. Senate.
Late Monday, a leading shareholder law firm said it filed a federal lawsuit against JPMorgan and various bank officials over the trading loss and its effect on the bank's stock price. A JPMorgan spokeswoman had no immediate comment.
The news of the losses has wiped nearly $19 billion from JPMorgan's market capitalization in just two trading days and renewed the debate about financial regulation and the concept of being "too big to fail."
"This is the best, or one of the best managed banks. You could have a bank that isn't as strong, isn't as profitable making those same bets and we might have had to step in. That's exactly why Wall Street reform's so important," President Obama told ABC's "The View" in an interview taped to air Tuesday. The network released a partial transcript late Monday.
JPMorgan said Chief Investment Officer Ina Drew, 55, who was among the highest-paid executives at the bank, had decided to "retire from the firm."
She will be succeeded by Matt Zames, a trader by background who is well-versed in risky financial bets. He was at one time employed at Long-Term Capital Management, a hedge fund whose 1998 collapse nearly caused a global crisis. Zames has in past been tabbed as a potential successor to Dimon.
The bank's statement made no mention of two subordinates of Drew who were involved with the trades -- London-based Achilles Macris and Javier Martin-Artajo -- who sources had said would leave. A memo Zames sent to staff, a copy of which was obtained by Reuters, said only that Macris would "transition his ... responsibilities." Continued...