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May 14th, 2012
10:52 AM ET

Sheila Bair on JP Morgan $2 billion loss: 'Even with very good management, these institutions are just too big manage'

NEW YORK (CNNMoney) - JPMorgan Chase announced Monday that Ina Drew, the firm's chief investment officer, has left the bank after revelations of a $2 billion loss sustained over the past six weeks.

A statement issued by the company said Drew made the decision to retire, a move that was widely expected after the company disclosed the unit she managed had suffered a major loss.

Sheila Bair, senior adviser at the Pew Charitable Trusts and former chair of the FDIC has called for closing some of those loopholes that allowed this type of risky investments to happen. She also says banks like JPMorgan Chase are too large to manage and need smaller and simpler institutions.

"This is still a very serious issue," Bair says. "I think it does underscore that even with very good management these institutions are just too big to manage, and especially when dealing with very complex derivatives instruments trying to hedge risk in large securities trading books, even the best of managers can stumble. And so it does I think require, suggests smaller, simpler institutions, ones that have more focused management on particular bus iness lines."

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Filed under: Banks • Regulation
soundoff (One Response)
  1. T Grillo

    In an alternate reality, maybe even on a different galaxy, a person by the name of Ina Drew has taken an early retirement from J.P. Morgan(since her department's blunder cost the bank at least $2.3 billion in losses) and she has decided to devote the balance of her life to helping her country execute massive reform and increased regulation of the Wall Street regulation practies. Undoubtedly, in this realtity, the reality of 2012 in the real world of the USA here and now, a person named Ina Drew undoubtedly signed an exit agreement with J.P, Morgon whereby she agreed to remain silent for the rest of her life about these matters.

    May 15, 2012 at 7:53 am | Report abuse | Reply

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