In February of 2011,
Perhaps by now when bankers hear that kind of public praise, they simultaneously hear a distant clanging, a dim alarm that provokes an undercurrent of anxiety. It seems inevitable that an acknowledgment of such star power will eventually lead to a fall, a big one, and one year and three months later, Drew succumbed. Her team had been bold, so bold that along with Dimon, she had become the public face attached to a
Drew never craved public recognition, which is one reason, up until the trading error, almost no one outside of
It was 1983, and Drew, just 26, had been in the business for only three years, but she proved herself quickly and was already running a small group of traders. A graduate of
In 1981, she moved to
By the mid-1980s, Drew was working directly under an economist named
“What was crazy about it,” Sabatacakis says, “was that by the time we were finished, we were making more than 50 percent of the bank’s profits.” This kind of risk-balancing would continue to define Drew’s career — only the dollar amounts kept growing, and the instruments used to manage risk became more and more complex.
Drew was something of an unusual figure on
One of the rare women to rise steadily into the management ranks on
In the early 1980s, Chemical was making a push to hire women as traders, but that did not mean the workplace was particularly enlightened.
Many women quit; others responded to advances with polite refusals. Drew tended to deflect with brusque, direct humor. She was once summoned to the office on a Saturday for what she thought was a business meeting, Havlicek said, only to find the colleague who called her in had something more intimate in mind. “I don’t know exactly what she said, but knowing Ina, it would have been something like, ‘You’re out of your mind, I’m going home,’ ” Havlicek said. “In the future, she laughed about it.”
The traditional narrative of the woman who made it on
Drew, who has a son and a daughter, wasn’t making excuses for her career or her family. She called her children regularly when they got home from school, even if that sometimes meant interrupting a meeting. She taped their drawings to her office wall and took them to work during school vacations, her son glued to his Game Boy as she engaged in global finance. Traders have early work hours, but Drew was particularly insistent about making it home for dinner with her family; for most of the 1990s, she showed up for work at
When the bank was trying to retain female talent after one merger, she refused to accept a position with less responsibility. “I remember being in her office, and there was Ina, pounding her desk, saying, ‘The last time I checked, I had breasts, too!’ ” Dublon says.
Drew was ambitious but never sought to acquire the kind of experience that would have groomed her for the role of chief executive. Her focus was part of the reason her bosses trusted her; she clearly was not angling for their job. While
If Drew was good at what she did, says
In the 1970s, trading bonds was a fairly straightforward business, and anyone with enough hustle could get on a trading floor; but by the 1980s, because of technology and globalization, bonds became more complex, and as the money got bigger, the competition got fiercer. Banks competed to develop investment products that would give them an edge and traders started relying on complex algorithms to beat the market. By the early 2000s, “tech-savvy investors had come to dominate
Drew did not have a business degree, much less the skills of a quant, and yet, as banking evolved and her bank kept merging with other banks, Drew survived. “When you merge, you get to see the other side’s business, and hers always looked better,” said
Drew made it through yet another merger, in 2000, when Chase merged with JPMorgan. Every merger is painful, entailing massive layoffs, factionalism and blatant power grabs. But the mutual disregard in this merger was especially high. JPMorgan had a sterling pedigree, and its bankers perceived themselves as innovators of gourmet financial products like structured derivatives. They experienced the merger as a comedown, as if they were Dean &
Drew’s deals essentially turned on one key question she seemed to answer correctly more often than most (or at least when it mattered most): Would interest rates go up or down? That insight seemed valuable but hardly cutting edge to her new colleagues. “She was like the idiot savant of ‘I’m long’ or ‘I’m short,’ ” says one former JPMorgan employee, summing up how some of his colleagues perceived her success.
Soon after the banks merged, Drew and her team sat in a conference room with their counterparts from JPMorgan, a group that included a banker named
No one achieves Drew’s level of power on
In 2004, Drew survived yet another change at the bank, a result of a merger with
As the head of the chief investment office and the manager of the bank’s investment portfolio, Drew had direct control over more money than most players on
Drew’s bosses heard the complaints about her over the years, but they generally dismissed them as mere jealous griping. “She oversaw a lot of money,” one former boss said. “There are always rivalries at that level. And anyone who disagrees with you? They must be stupid.”
It is surprising how much time you can spend talking to bankers without ever hearing the word “money.” Bankers talk about yield and credit spreads and compensation and
Some of that confidence may have come from her faith in her longstanding team, many of whom had been with her from the Chemical days. They managed risk by buying and selling mostly safe assets like U.S. Treasury bonds and high-quality mortgages; their value would generally rise with falling interest rates and vice versa. But in 2006, she and Dimon together decided that her group should branch into more complex products to hedge the expanding, ever-more-complex holdings of the bank. To help build international range for her group and to diversify her positions in the market, Drew hired a team that would trade foreign bonds and corporate bonds — and would have the quantitative skills to trade more complex and riskier credit derivatives.
To lead the effort, Drew hired
The year 2008 was a time most bankers would like to forget; for Drew, it was one of the highlights of her career. Starting in late 2007, her group piled money into secure, long-term government-backed bonds, close to
Despite its success, Drew’s group — the bond traders in
Drew had created within her own group the same dynamic that had vexed her since the merger with JPMorgan: one group of traders, who mostly handled straightforward assets, felt insulted and underestimated by another group, who prided themselves on the sophistication of their quantitative skills and conveyed their disdain openly in videoconference calls. “New York hated London,” says one former trader who worked in
The worst of the fighting occurred when Drew, ill with Lyme disease for most of 2010, was out of the office. When she came back, Duersten had just turned 60 and retired in
The trouble that eventually ended Drew’s career at the bank started out, the bank argues, as a precaution, the same kind of precaution, in fact, that set her on a successful career path at
Back in 2007, the bank asked the
Following the crisis, the team in
In any case, there were several layers of people at the bank whose job it was to evaluate risk. Being the risk manager at a bank, of course, is like being the chaperon at the dance: your authority is more than matched by the desire of others to subvert it. “The trader in the world of
A former executive said he warned Dimon for years that the quality of risk control in the chief investment office was not transparent enough, compared with that in the investment bank; Drew brushed him off, and Dimon told him, he says, essentially, to “mind my own business.” “Honestly, I don’t care what second-guessers say in life,” Dimon told me when asked about the warnings. “If anyone in the company knew, they should have said something. No one came to us beforehand and said we have a problem we should be looking at.”
A review of the risk limits at the chief investment office was moving slowly along in 2011. By late November, Drew realized she needed a more experienced risk officer than the one in place,
Later, when the trade collapsed, it was reported that Goldman was the brother-in-law of
Goldman started pushing forward a review of the risk limits, which generally needed more specificity. One serious defect in the risk evaluation of Iksil’s position was that its limit was folded into the aggregate risk of the unit’s entire portfolio. In other words, Iksil could continue to increase the position without triggering alarms. Even more problematic, a new value-at-risk model was implemented in January, which, unknown to the team ultimately allowed for even more leeway, creating a false sense of security.
In December, Drew and other senior managers determined that the unit should reduce the overall exposure to risk, mostly because of soon-to-be-implemented regulations imposing more stringent capital requirements.
Iksil’s colleagues liked him, but he was not popular among some
Disgruntled dealers might be more likely to gossip, and in March, Martin-Artajo, always a little nervous, got positively jittery, said the bank employee. The dealers on the street were talking, he told his bosses; they knew too much. Knowledge, for the hedge-fund managers who buy from the dealers, was power. Martin-Artajo had reason to feel nervous: the hedge-fund managers had figured out that JPMorgan’s position had grown so large that it was dominating the market, which meant there were few options if the bank wanted to unwind the position. This gave the few buyers Iksil could turn to tremendous negotiating power.
By the third week of March, after several days of losses, Drew was concerned enough to order her traders to stop trading the portfolio. At the same time, she started holding daily teleconferences with
Tension at the bank escalated, and Dimon, who was traveling, started checking in with Drew. She was concerned about the position but also seemed a little bit riled up: The hedge funds were trying to squeeze the bank, she told Dimon, but the bank was O.K. They didn’t seriously consider the possibility that they might have to unwind the position quickly, which would render them vulnerable to a market that would take advantage of their desperation. Most of the key players in the unit thought the same thing: this was a long-term position, and no one had the firepower, the capital, to force mighty
Drew and her team had backed themselves into a corner. Then, on
The trade started losing even more money. A war-room mentality took over, moving from the chief investment office to more and more players at the bank. A team flew to
When other crises hit the bank, Drew had seemed, by all accounts, her most alive and alert. But in this instance, she seemed unable to step back and look at the big picture. Faith in Drew’s ability to handle the crisis started to seep away. In May,
The mood around Drew got darker. Word spread around the building that some members of the operating committee were urging Dimon to fire her. “Ina had to have known,” the bank employee said. “Everyone knew, and she was very well connected. This was not a matter of your colleagues not having your back. This was them sticking the knife in it.”
By the second week in May, the stress had taken a toll. A colleague saw Drew walking around the executive floor, her mascara smeared. A slight tremor in her hand left over from her illness seemed worse, a physical symbol of her emotional state. Although she still came to work dressed impeccably, she had lost weight and looked somber, almost shut down. The week that the bank decided to make a public disclosure, 20 senior people gathered in a meeting room on the 47th floor. Everyone went around the room and spoke about what they had found out and what still needed to be learned. After about 45 minutes, with the meeting drawing to a close, Drew, uncharacteristically, still had not said a word. Finally,
On Mother’s Day, she drafted her resignation letter. By Monday afternoon, she was gone.
In July, the bank restated its earnings, announcing concerns that traders at the unit had not revealed “the full amount of the losses in the portfolio during the first quarter,” mismarking, in their favor, the numbers that would indicate their theoretical losses or gains at the end of the day. (
Maybe Drew still believes — as Macris does, according to people at the bank — that the position could have worked out given enough time. Maybe if she had asked the right questions sooner, her traders would have been forced to clarify or she would have sensed danger before it went out of control. Many systems failed and perhaps, too, her judgment.
Drew was someone known for her grasp of the big picture, for internalizing historical trends and economic cycles to the point where her gut instincts were almost always right. She was also someone known for having a personal touch. But in this instance, she seemed incapable of grasping the complicated, interlocking human dynamics that can’t be measured by reassuring models — the idea that a position could be leaked, that the press might bear down, that the regulatory environment could compound all those problems.
For a few years, one of Drew’s friends had been talking to her about retiring. For that friend, it was yet another matter of risk calculation: If she was going to retire soon enough anyway, her friend advised, do it while she was still on top, before time stopped being on her side. Wait long enough, and someone else might decide for her. Or something might go wrong, as things do.
Even Drew’s friends do not feel that she could have stayed in her job, especially in the current regulatory environment. She was, after all, in charge of the unit that lost
Drew forfeited two years’ worth of compensation. But she was also very wealthy and was allowed to keep stock upon her resignation. There are critics who wonder why Dimon has not surrendered some of his own compensation.
Drew spent the first weeks after she left JPMorgan doing what she always did: heading into
After a few weeks, the lawyers’ questions slowed down. And Dimon went out of his way to publicly praise Drew and the work she did. “Let me just say a word about Ina Drew,” he said in the middle of the second-quarter-earnings call in July. “I have enormous respect for Ina as a professional and as a person; she has made some incredible contributions to this company.” She has not been accused of malfeasance, and as the investigations wear on, the bank still seems comfortable defending her integrity.
For Drew, Dimon’s comments marked a turning point: at least she knew — and the world knew — that Dimon did not consider her a bad actor. She started planning a trip to
Drew’s old friend
“Yeah,” Drew said to him quietly. “I do.”
Susan Dominus is a staff writer for the magazine. Her last cover story was about a mysterious illness affecting teenagers in Le Roy, N.Y. Editor:
|Copyright:||Copyright 2012 The New York Times Company|
|Source:||New York Times Digital|