Tue, May 15, 2012 - Page 10 News List

JPMorgan losses to claim three executives

AFP, Washington

Three JPMorgan Chase senior executives are set to resign this week over the firm’s US$2 billion loss on derivatives trades, including the executive who oversaw the trade, US media reported on Sunday.

The reports came as JPMorgan Chase chief executive Jamie Dimon admitted that the stunning loss had jeopardized the bank’s credibility and given regulators a fresh opportunity to target Wall Street.

Dimon was set to accept as early as yesterday the resignation of Ina Drew, a 55-year-old chief investment officer who has worked at the firm for three decades, the New York Times said, citing company executives.

The Wall Street Journal said two other high-ranking executives were set to leave during the week: Achilles Macris, who heads the London-based desk that placed the trades and trader Javier Martin-Artajo, a managing director on Macris’s team.

Drew had repeatedly tendered her resignation since the extent of the loss became apparent at the end of last month, but Dimon had refused to accept it until now, according to the reports.

London-based trader Bruno Michel Iksil, nicknamed “the London whale” for the large positions he took in credit markets, is also likely to leave though it remains uncertain when he will do so, the Journal said.

‘STUPID’

In a contrite, but unshaken appearance, Dimon told NBC’s Meet the Press program that the big loss incurred by the New York-based bank, which triggered a slide in banking shares on Friday, was “stupid” and damaging, but not bad enough to stop the company from making a profit this quarter.

The Wall Street boss has led US banks in fighting the proposed Volcker Rule, which would ban so-called proprietary trading, when banks trade on their own accounts. Banks are also resisting curbs on their hedging activities.

Asked if JPMorgan’s losses had given regulators new ammunition to clamp down on Wall Street after the US government spent billions to bail out -financial institutions during the 2008 crisis, Dimon replied: “Yes, absolutely. This is a very unfortunate and inopportune time to have had this kind of mistake.”

He denied that the company’s hedging scheme — designed to lower investment risk, but which instead spectacularly backfired — had placed its future in doubt.

“It’s a question of size. This is not a risk that is life-threatening to -JPMorgan,” said Dimon, who on late on Thursday told analysts that the loss could increase to US$3 billion through the end of next month as a result of market volatility.

NO JEOPARDY

“This is a stupid thing that we should never have done, but we are still going to earn a lot of money this quarter. So, it isn’t like the company is jeopardized,” he said.

However, the losses, could prompt unwanted ramifications.

“We hurt ourselves and our credibility yes, and we have got to fully expect and pay the price for that,” the JPMorgan chief added.

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