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Ex-JPMorgan executive Drew says not to blame for "Whale" losses
A former top JPMorgan Chase (JPM.N) official blamed traders and managers who reported to her for bets that led to $6 billion in losses for the bank, telling lawmakers on Friday that her team changed projected losses and hid important information from her.
Ina Drew, the former chief investment officer, said she does not believe she bears personal responsibility for the disastrous trading scheme that has been a black mark against the Wall Street bank.
"Some members of the London team failed to value positions properly and in good faith, minimized reported and projected losses, and hid from me important information regarding the true risks of the book," said Drew, who spoke softly but firmly about her role in the debacle.
Drew's comments kicked off a hearing into the losing derivatives bets that came to be known as the "London Whale" trades.
The Senate Permanent Subcommittee on Investigations released on Thursday a report that alleged the bank ignored risks, misled investors, fought with regulators and tried to work around rules as it dealt with mushrooming losses in that portfolio.
The report blamed Drew and other senior managers for doing little to rein in the risky trading.
In her testimony, Drew defended her oversight as "reasonable and diligent" and said she believed she didn't hold personal responsibility for the losses.
"Clearly mistakes were made," she said.
Drew spent more than 30 years at the bank, and left it in May, after the bad bets became public.
The largest U.S. bank has long been seen as the safest and best-managed in the country, but the report could taint its reputation as well as that of its Chief Executive Jamie Dimon.
The report also gives ammunition to advocates calling for stricter financial reforms, including to regulators crafting the Volcker rule, which proposes to put limits on banks betting with their own funds.
In opening remarks, Senator Carl Levin, the Democrat from Michigan who heads the subcommittee, said: "If derivatives books can be cooked as blatantly as they are in this case without breaking the rules, then the rules need to be revamped."
[Source: Reuters, Washington, 15Mar13]
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