- Ina Drew refused to accept responsibility for losses before Senate panel
- Former exec pointed finger at London-based traders and managers
- Testifying over 4.1bn trading loss bank racked up last year
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Blame: A former JPMorgan exec pointed the finger at the bank's London office as she refused to accept responsibility for the disastrous 'London whale' trades
The former JPMorgan executive who earned millions while in charge of the unit that made the disastrous 'Whale' trades has blamed staff in the London office for the 4.1bn ($6.2bn) in losses revealed last year.
Tesitifying before a Senate panel in the U.S. yesterday, former chief investment officer Ina Drew refused to accept responsibility for the losses, and instead pointed a finger at the traders and managers below her.
They did not appear at the hearing because they are in London and outside the Senate's jurisdiction.
Ms Drew told the panel some members of the team had 'failed to value positions properly and in good faith', and 'hid' from her important information regarding the 'true risks of the book'.
Blame-shifting proved to be a theme of the hearing held by the Senate Permanent Subcommittee on Investigations, even as Chairman Carl Levin hit Ms Drew and other current and former JPMorgan executives hard over past statements he believed to be inaccurate.
The litany of accusations by the powerful panel raises the prospect that the trading debacle will continue to legally dog the Wall Street bank, long considered one of the best managed.
Yesterday's hearing and a subcommittee report released on Thursday paint a damning picture of a bank and high-level employees raking in huge payouts while ignoring risks, deceiving investors, fighting with regulators and trying to work around rules as losses mushroomed in a derivatives portfolio.
Ms Drew made $29 million in 2010 and 2011, and Achilles Macris, who supervised the trading book at issue and reported to Drew, made $32 million during the same time frame. They were among the highest paid JPMorgan employees in those years.
Ms Drew, who resigned last May and was long a trusted lieutenant of Chief Executive Jamie Dimon, lamented the loss of her 30-year-career at JPMorgan and defended herself as a 'reasonable and diligent' manager.
'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,' Ms Drew said.
'I did not (and do not) believe I bore personal responsibility for the losses in the synthetic credit book," she said in her prepared remarks.
Hearing: Ina Drew, former Chief Investment Officer of JPMorgan, gave evidence before the Senate Homeland Security Investigations Subcommittee in Washington yesterday
Yesterday's hearing came less than 24 hours after its report accused the bank of misleading regulators and shareholders over the losses suffered when the credit derivatives market soured.
Ms Drew told the panel she had asked London-based executives Achilles Macris and Javier Martin-Artajo about the positions as losses on the trades reached $1bn.
'...Their responses were seemingly thorough and consistently reassuring,' she said.
The two men had declined to testify. It was not within the power of the hearing to compel them to attend.
Senator John McCain from Arizona, the top Republican on the panel, questioned why Ms Drew and others were transferring blame, saying it was hard to explain. 'It seemed that the traders seemed to have more responsibility and authority than the higher-up executives,' Mr McCain said.
Dimon was not invited to testify. He has already testified twice before other congressional panels.
Ms Drew ran the bank's chief investment office before stepping down after losses ballooned in the early part of 2012. The furore saw one UK trader nicknamed the 'London Whale' because of the scale of the trades.
French-born trader Bruno Iksil, who led the London team making the trades, was also dubbed Voldemort after Harry Potter's evil nemesis, because he was such a 'scary and powerful' force in the City.
In a statement, the bank said: 'We have made regrettable errors and overhauled our risk policies to correct these mistakes, but senior JPM executives always provided information to regulators and the public that they believed to be accurate.'
JPMorgan shares closed down 1.9 percent yesterday, underperforming the KBW Bank Index of bank stocks which closed up 0.4 percent.
Lawyers for Mr Macris and Mr Martin–Artajo have denied any wrongdoing.
She's probably correct.
- eyes in the sky , somewhere in lala land, 16/3/2013 16:23
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