The Federal Reserve meanwhile said it is now looking into whether JPMorgan has similar risk problems at other units, joining a probe by the US Securities and Exchange Commission and upcoming hearings in the US Senate. 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's so important," President 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.