JPMorgan Chase & Co. CEO Jamie Dimon attends a session at the World Economic Forum (WEF) in Davos January 27, 2011.
JPMorgan Chase CEO Jamie Dimon attends a session at the World Economic Forum in Davos, Switzerland, last year. REUTERS/Vincent Kessler

As the leader of JPMorgan Chase & Co's hedging unit quit after trading losses that could end up exceeding $3 billion, the board seemed to be rallying behind CEO Jamie Dimon before the huge bank's annual shareholder meeting Tuesday.

The bank expects to defeat a shareholder proposal at the meeting in Tampa, Fla., to name an independent chairman, a person familiar with the situation told the Wall Street Journal. Even if shareholders back the nonbinding resolution, board members won't strip the 56-year-old Dimon of his chairmanship, another person said. He has been chief executive since 2005 and chairman since 2006.

The board backs Dimon and the way he quickly admitted and sought to fix the bank's mistakes, according to this person. We made errors, and we are going to take care of it, Dimon told fellow directors during a conference call last week, the person said. This was bad thinking. This was stupid.

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, Reuters reported.

The central bank is reviewing whether the trading losses have any broader implications for how JPMorgan manages its risk, a Fed spokeswoman said.

The Office of the Comptroller of the Currency, which regulates national banks, said on Monday it is also examining the losses.

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 is so important, President Barack 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.

I am proud of the firm's efforts over the past several days to address our mistakes and pleased to join the dedicated employees in our Chief Investment Office today, Zames wrote.

Shares of JPMorgan closed 3.2 percent lower at $35.79 on the New York Stock Exchange on Monday. Ratings service Moody's warned Monday the trading losses were a credit negative for bondholders as well.

But one investor called the sell-off a gift and said he was adding to his position, with an expectation the stock would rise roughly a third from current levels by year-end.

Dimon has fallen on his sword, promised to take action, tossed a few players under the bus ... nothing left to be done that is not already under way, said Edward Shill, chief investment officer of QCI Asset Management, which held more than 280,000 shares as of March 31.

The departure of Drew after 30 years at JPMorgan comes after the unit she ran, the Chief Investment Office, mismanaged a portfolio of derivatives tied to the creditworthiness of bonds, according to bank executives.

Drew reported directly to Dimon, who was known to visit London to meet with traders from the CIO unit, including Macris. That said, it remains unclear how involved Dimon was in the precise details of the positions.

JPMorgan, the biggest U.S. bank by assets, also said that Mike Cavanagh, CEO of the Treasury & Securities Services group, would lead a team of executives overseeing its response to the losses.

In appointing Cavanagh to coordinate the bank's response to the loss, Dimon is turning to a long-time protégé. Jamie usually gives him jobs heavy on management and strategy, said a former JPMorgan executive.

One hedge fund manager who previously ran a proprietary trading book at JPMorgan said the bank's public commitments to trim risk were at odds with its network of trading groups making bets independently, with only a handful of the bank's most senior executives notified of their vast, complex exposures.

This (CIO) group was completely separate, completely distinct from the prop-trading unit. We had no clue about their prop book and they would have no clue about ours for that matter, the manager said.

The mammoth losses have marred JPMorgan's reputation for risk management and thrown an unflattering spotlight on Dimon, a critic of increased regulation. He is scheduled to speak on Tuesday at the bank's annual meeting in Tampa.

JPMorgan is one of the best managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting, Obama told ABC. At one time Dimon was considered a favorite for Treasury secretary in a potential second Obama administration.

Dimon has said he is open to regulatory scrutiny of the losses, which the White House confirmed on Monday was under way.

There is an investigation into what happened at JPMorgan that the SEC is conducting, White House spokesman Jay Carney said, declining to elaborate.

A U.S. Treasury official said the Financial Stability Oversight Council had not convened to discuss the losses and did not plan to. The Senate Banking Committee plans to hold hearings in the coming weeks on Wall Street reform, it said on Monday, during which it will likely press U.S. regulators about the JPMorgan losses.

The Fed said late Monday it was reviewing JPMorgan's risk practices across the firm.

Until the loss was disclosed late Thursday, Drew was considered by some market participants as one of the best managers of balance-sheet risks. She earned more than $15 million in each of the last two years.

According to JPMorgan's last annual proxy statement, Drew would be entitled to the continuation of almost $14.7 million in stock awards in case of resignation, provided she had met full-career eligibility criteria.