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(Reuters) - JPMorgan Chase & Co's (JPM.N) board, under fire for the bank's trading losses and myriad government probes, said on Monday that it was adding two directors and handing more power to its lead independent director, steps that give it extra supervision over Chairman and Chief Executive Jamie Dimon.
Critics said the moves did not go far enough to rein in Dimon, who piloted the bank through the financial crisis but is struggling to improve his relationship with regulators in the aftermath of the meltdown. Dimon has played a key role in selecting board members in the past.
The new directors are Linda Bammann, a bank risk expert who worked for Dimon when she was at Bank One and JPMorgan, and Michael Neal, who until June was the chairman and CEO of General Electric Co's (GE.N) GE Capital.
The board of the largest U.S. bank said it was giving new powers to its lead independent director, Lee Raymond, including the right to call board meetings at any time and the right to preside over meetings that pertain to Dimon. Previously, Raymond could only call meetings of other independent directors, and only ran meetings when Dimon was absent. Raymond is the former chairman and CEO of ExxonMobil Corp (XOM.N).
To some investors, Bammann is too close to Dimon, and the bank's steps to bolster the lead independent director role are undermined by the position being held by Raymond, a longtime Dimon backer.
"Bringing in someone who was a former deputy of Jamie Dimon's is absolutely the wrong move," said Michael Pryce-Jones, a spokesman for CtW Investment Group, which had campaigned this year against the re-election of three directors, two of whom have since resigned. Neal, he added, worked for a too-big-to-fail financial company himself, which could make him less likely to challenge Dimon.
"These are just the wrong folks. There are plenty of outside perspectives they could have brought in. Instead, they didn't want to rock the boat."
The bank has for months been fending off shareholder complaints about Dimon's power over the board of directors, as well as the composition of the board. In May, a group of investors tried to strip Dimon of his chairman title, arguing that last year's London Whale trading losses revealed that he needed oversight from a separate chairman.
Dimon threatened to quit if he lost the title, and ended up winning a shareholder vote on the matter with a higher percentage of the vote than last year. But investors told Reuters before the bank's annual meeting that even if the CEO won the shareholder resolution, they would press for changes behind the scenes.
In July, two of the three directors that investors had complained about resigned.
JPMorgan has been under intense scrutiny from regulators and some shareholders since admitting in May 2012 that it would record trading losses from derivatives positions. The losses came to be known as the "London whale" trades because they were made by a trader based in the United Kingdom who took outsized positions.
Dimon's relationship with regulators has also come under scrutiny. JPMorgan and its employees are facing more than a dozen federal, state, and foreign investigations now, over issues including the London whale trades, the marketing of mortgage securities, and energy trading.
On Monday, Marianne Lake, the bank's chief financial officer, said at a conference that the cost of regulatory settlements would more than consume the gains JPMorgan expects from its loans performing better in the third quarter.
Among the probes the bank faces is a Securities and Exchange Commission investigation into whether the bank hired the children of key Chinese officials to help it win business.
In July, the bank agreed to pay a $285 million penalty and give back $125 million of trading profits in a settlement with the Federal Energy Regulatory Commission for alleged power market manipulation. JPMorgan neither admitted nor denied violations.
The Department of Justice is conducting a criminal investigation into whether several employees of the bank tried to impede the FERC probe.
Federal prosecutors last month brought criminal charges against two former JPMorgan traders, accusing the pair of deliberately understating losses in the "Whale" scandal. The SEC is seeking an admission of wrongdoing from the bank in a parallel civil action, a rare step for the government agency.
Bammann is expected to be formally elected on September 16, according to the announcement. Until July, she was a director of Freddie Mac FMCC.OB, the housing finance agency also known as the Federal Home Loan Mortgage Corp, which came under government receivership during the financial crisis. She was chief risk officer at Banc One Corp under Dimon and followed him to JPMorgan in 2004 when it acquired the smaller bank.
Neal plans to join the board in January after retiring at the end of 2013 from GE, where he is vice chairman. He developed "deep knowledge of global financial services and markets" in 26 years at GE Capital, JPMorgan said in the announcement.
The board will not annually rotate the lead independent director position, the announcement said. The previous presiding director was appointed annually, according to the company's last proxy statement.
Reuters had reported last month that the bank was close to naming two new directors with expertise in risk and finance.
Shares of JPMorgan closed up 0.6 percent at $52.86.
Reporting by David Henry in New York and Aman Shah in Bangalore; Editing by Lisa Von Ahn, Bernard Orr and Tim Dobbyn