Ex-JPMorgan exec says her oversight was undermined
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WASHINGTON — A former top executive for JPMorgan Chase is blaming last year's $6.2 billion trading loss on other executives at the firm, telling a Senate panel Friday that they undermined her oversight at the firm.
Ina Drew, the firm's former chief investment officer overseeing trading strategy, told the Senate Permanent Subcommittee on Investigations that executives under her watch failed to control risks out of the London office and that kept her from preventing the losses.
The hearing occurred a day after the Senate panel issued a report that ascribed widespread blame to key executives at the firm. The report said they ignored growing risks and hid losses from investors and federal regulators.
Drew blamed executives in two units that reported to her. She says her risk management team failed to flag the risks, while her finance executives did not properly review the values assigned to transactions.
After the trading loss came to light, Drew resigned after 30 years with the firm and voluntarily paid back two years of salary.
She said Friday that while she doesn't believe she bore personal responsibility for the losses, she decided to step down to make it easier for JPMorgan "to move beyond these issues." Her comments were her first public remarks since leaving the firm.
The report noted that executives at JPMorgan understated the trading losses to federal examiners by hundreds of millions of dollars and dismissed questions raised about the trading risks. It also suggested that key executives, including CEO Jamie Dimon, were aware of huge losses at the bank, even while they were downplaying the risks publicly.
The "trading culture at JPMorgan ... piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight and misinformed the public," Sen. Carl Levin, D-Mich., the subcommittee's chairman, said Friday at the hearing.
On Thursday, JPMorgan acknowledged it made mistakes but rejected any assertions that it concealed losses or risks. A spokesman declined to comment directly on the accusation that Dimon knew of the trading loss in April.
In April, news reports said a trader in JPMorgan's London office known as "the whale" had taken huge risks that were roiling the markets. Dimon immediately dismissed the reports as a "tempest in a teapot" during a conference call with analysts.
But in May, Dimon acknowledged that the bank had lost roughly $2 billon. And during testimony to a separate Senate panel in June, Dimon said the bank showed "bad judgment," was "stupid" and "took far too much risk."
The figure was later revised to more than $6 billion.
The loss came less than four years after the 2008 financial crisis and hurt the reputation of a bank that had come through the crisis known for taking fewer risks than its competitors. Three employees in the London office were fired — two senior managers and a trader. It also led to Drew's resignation.
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