BREAKINGVIEWS-JPMorgan CFO rejig leaves only Dimon unpunished

Wed Nov 21, 2012 2:32am IST

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Antony Currie

NEW YORK, Nov 20 (Reuters Breakingviews) - JPMorgan's (JPM.N) latest executive reshuffle is one more step in consigning the disastrous “London Whale” trade to history. Promoting Marianne Lake to replace Doug Braunstein as chief financial officer ticks a number of boxes for the bank. But one last trick is needed to harpoon the episode for good. Chief Executive Jamie Dimon remains unpunished for the fiasco responsible for more than $6 billion of losses. Clawing back some of his pay would complete the clean-up.

Dimon has already done a fair bit in addition to ousting those who placed the bets. Ina Drew, who ran the Chief Investment Office responsible for the trades, was sent into retirement. And the bank accepted her offer to give up her compensation from the previous two years. The risk-management function was shaken up. And Dimon, presumably with the board's assent, even put a new succession plan in place.

In fact, he had already effectively demoted Braunstein. First, Dimon sidelined him by putting Michael Cavanagh, head of Treasury Services, a former CFO and a now a front-runner to be the next CEO, in charge of the probe into the CIO mess. Dimon then downgraded the CFO function by no longer having Braunstein report to him but to new co-chief operating officer and CEO candidate Matt Zames.

Dimon is now restoring the office's place in the hierarchy. Not only will new numbers chief Lake report directly to him; she is also a chartered accountant who has spent her career in finance and operations. That's a better background than being an investment banker. Braunstein can now return to his roots as a vice chairman advising the bank's top clients. Lake's appointment also adds another woman to the executive ranks – joining asset management boss Mary Callahan Erdoes on the 13-person operating committee.

Now Dimon needs to feel some pain, voluntarily or otherwise, and not just because he's the boss: Drew reported directly to him. Clawing back any of his pay is ultimately a decision for the board. There's little reason to think Dimon himself would not insist on it. But some timely chastising would be a welcome way to close the whale affair.

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CONTEXT NEWS

- JPMorgan Chase has promoted Marianne Lake to the position of chief financial officer. She replaces Doug Braunstein, who will become a vice chairman of the bank and return to his investment banking roots and focus on advising the bank's top clients. Braunstein has been CFO since June 2010.

- Lake is currently CFO of JPMorgan's consumer and community bank. Before taking that role she was global controller of the investment bank between 2007 and 2009 and managed global finance infrastructure and controls in the corporate finance group between 2004 and 2007. Previously she was the senior financial officer in the UK. She started her career as a chartered accountant at PriceWaterhouseCoopers.

- JPMorgan announcement: link.reuters.com/xej24t

- Reuters: JPMorgan names retail finance executive as new CFO [ID:nL1E8MJGSP]

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- For previous columns by the author, Reuters customers can click on [CURRIE/]

(Editing by Rob Cox and Emily Plucinak)

((antony.currie@thomsonreuters.com)(Reuters messaging antony.currie.thomsonreuters.com@reuters.net)) Keywords: BREAKINGVIEWS JPMORGAN/GOVERNANCE

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