Ina Drew will retire from JPMorgan Chase.
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.
The group had been making trades designed to hedge against risk, but had amassed a large position in credit-default swaps that began to sour.
Net losses, after factoring in other securities gains, are expected to exceed $800 million by the end of the second quarter. And losses could increase depending on market conditions and the bank's actions moving forward.
The unit had been expected to post a net gain of $200 million.
"Despite our recent losses in the CIO, Ina's vast contributions to our company should not be overshadowed by these events," CEO Jamie Dimon said in a statement.
Drew is in line to receive $14.7 million severance in the form of stock, $2.6 million in pension benefits and almost $10 million in deferred compensation, according to Theo Francis, a senior reporter at footnoted.com, a website that specializes in SEC filings. (Francis is married to a CNNMoney reporter)
The company's board of directors could award additional severance pay.
JPMorgan said that Matt Zames, who is currently the co-head of global fixed income in the investment bank and head of capital markets within the mortgage bank, would succeed Drew.
Zames was formerly a senior trader at Long-Term Capital Management, the failed hedge fund that placed massive bets on the trajectory of interest rates and required a $3.6 billion bailout from the Federal Reserve in 1998.
"Nobody knows about the dangers of what's happening at JPMorgan more than Matt," said James Rickards, former general counsel at Long-Term Capital Management.
"My question for management is why didn't they enlist Matt earlier to look over Ina's shoulder," said Rickards, now a senior managing director at the merchant bank Tangent Capital Partners. "Matt would've seen this problem in a heartbeat because it's what happened at LTCM."
JPMorgan, the nation's largest bank by assets, also announced that Mike Cavanagh, its former chief financial officer, will lead a firm-wide operating committee that will coordinate the bank's response to the loss.
|Latest Tesla fire caused by running over a metal object|
|Porn-viewing bosses infect corporate networks|
|Chrysler recalls 1.2 million trucks|
|Twitter stock already downgraded|
|What shutdown? Job growth strong in October|