Everybody knows these are troubled times for our republic, with banks under constant assault from regulators and broke people. So it's a huge relief to learn that a banker can make a little mistake every now and then and not have to worry about losing any money over it.
Today's inspiring banker is Ina Drew, the manager of JPMorgan Chase's chief investment office, which was in charge of managing the bank's risks. After a long career of managing risks through decades of financial crises, Drew decided to step down from the deck for just a minute or two, once all of the really scary risks seemed to have passed. Just a little breather, you know, to stretch her legs, while the boys on the trading desk took the boat for a spin in calm waters, with a wink from Captain Jamie Dimon. Just long enough to let those traders lose $2 billion, or $4 billion, or $6 billion, or $9 billion, or whatever, in credit-derivatives bets that Dimon eventually had to call indefensible and "egregious."
As part of his public show of humiliation over these losses -- which he also hastened to point out weren't all that big a deal, really, given the size of JPMorgan's profits and assets -- Dimon told Congress that somebody was probably going to be getting some of their pay and bonuses clawed back over this whole egregious incident. That would show them!
Except one person is probably not getting anything at all clawed back, Bloomberg reports today: Ina Drew. Because she went ahead and retired after her CIO ran aground, she will probably get to keep the $21.5 million in stock and options she got in lieu of a gold watch, Bloomberg writes:
The bank's employment terms require executives to forfeit unvested restricted stock and options, worth $21.5 million in Drew's case, if they are fired "with cause." Because she was allowed to retire and keep that money, the company probably won't claw back her bonuses, pay specialists said.
As Felix Salmon points out, the point of giving an employee stock and options is to keep them hanging around hoping those stock and options get more valuable. Not so much in Drew's case.
"They were meant to incentivize her to work hard," Salmon writes; "instead, they have turned into a lovely farewell gift from the bank."
A lovely gift that has actually gotten about 22 percent cheaper since late March, losing about $29 billion for shareholders. Some of that decline is Europe's fault -- a lot of it probably. And Obama's for wrecking the economy with health care laws or gay marriage or whatever.
But some of this is Drew's responsibility.
And then there's the matter of the big ugly hole this loss will put in JPMorgan's quarterly earnings, which it will report on July 13. Dimon has promised the bank will turn a fine profit, no worries. But Dimon may yet have to eat those words, warns Peter Eavis of The New York Times, and wash them down with some tempest tea. Or the bank might have to drain some cash from reserves to turn a loss into a profit, which is not much better.
All of this happened on Drew's watch. Maybe she deserves some loyalty from Dimon and the bank's board for her years of competent service. You know, those other years, before this one. But should we also then assume that Dimon, in a further show of loyalty to Drew, will offer up some of his own pay for clawing-back in place of Drew's? We probably shouldn't hold our breath for that.