Ina R. Drew, JPMorgan Chase's chief investment officer and a bank employee for three decades, resigned Monday, and the big bank named Matt Zames, co-head of global fixed income, as her replacement.
Zames, who will join the firm-wide Operating Committee, is also head of capital markets in JPMorgan's mortgage bank division and will continue that role.
Ina Drew has been a great partner over her many years with our firm. Despite our recent losses in the Chief Investment Office, Ina's vast contributions to our company should not be overshadowed by these events, said Jamie Dimon, JPMorgan's chairman and CEO, in a statement.
It's important to remember that our company is very strong and well capitalized, with leading franchises across our businesses. We maintain our fortress balance sheet and capital strength to withstand setbacks like this, and we will learn from our mistakes and remain diligently focused on our clients, who count on us every day, he added.
Separately, the banks said Mike Cavanagh, CEO of JPMorgan's Treasury & Securities Services group and its former CFO, will lead an executive inquiry into the trade.
Drew repeatedly offered her resignation to Dimon, who demurred until now, according to the New York Times.
The 55-year-old Drew was among the company's top-paid executives, making about $14 million last year. Drew instructed traders to make moves intended to protect JPMorgan Chase from ongoing economic turmoil in Europe.
The push begat the now-infamous London Whale: Bruno Michel Iksil, a U.K.-based JPMorgan trader, single-handedly put the company in line for a shocking one-month loss through a series of bets made within the synthetic credit-default-swap market, apparently carrying out Drew's orders.
The bets placed by Iksil became too unwieldy to pull out when shifts in the market made Drew's instruction untenable. The hedge backfired, costing the company what many believe will exceed the current $2 billion estimate.
Drew was a well-known trader, beginning at Chemical Bank and climbing the ranks after it was acquired by what became the current JPMorgan Chase behemoth.
This is killing her, a former JPMorgan Chase executive told the Times, adding, In banking, there are very large knives.
The trading debacle forced Dimon to offer a battery of apologies on NBC's Meet The Press on Sunday.
This is a stupid thing that we should never have done, but we're still going to earn a lot of money this quarter, so it isn't like the company is jeopardized, Dimon said during the interview. We hurt ourselves and our credibility, yes -- and that you've got to fully expect and pay the price for that.
Critics of the financial industry have seized upon JPMorgan Chase's recent misadventure to reignite debates over the Volcker Rule, a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act originally proposed by former Federal Reserve Chairman Paul Volcker. Signed into law in 2010, the measure is still being interpreted by U.S. regulatory authorities.
Meanwhile, two other high-ranking JPMorgan Chase employees are expected to join Drew in departing the bank this week, according to the Associated Press' account of an article in the Wall Street Journal. They are an executive in charge of the London desk that made the unsuccessful trades and a managing director on that team, AP reported.