Two former high-ranking executives at JPMorgan Chase faced tough questions from senators today about why the bank played down risks and hid losses from regulators when it was losing billions of dollars. Douglas Braunstein, the former chief financial officer, and Ina Drew, the former chief investment officer overseeing trading strategy, were pressed to explain why bank executives gave federal examiners in April information that significantly understated losses for the first quarter of 2012. "The number I reported (to the regulators) was the number that was given to me," said Drew, who resigned last spring after the losses became public.
Drew said that while she doesn't believe she bore personal responsibility for the losses, she decided to step down to make it easier for JPMorgan "to move beyond these issues." Her comments were her first public remarks since leaving the firm. Braunstein acknowledged that risk models for the trading operation were changed in a way that was improper early last year. The changes made the bank's trading losses appear smaller than they were. The hearing was held a day after the Senate Permanent Subcommittee on Investigations issued a scathing report that ascribed widespread blame for $6.2 billion in trading losses to key executives at the firm. (More Ina Drew stories.)
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