JPMorgan Chase names Craig Delany chief investment officer

Delany will oversee investment of JPMorgan's excess deposits, which have piled up as lending growth has not kept up with depositors' cash

JPMorgan Chase & Co named senior mortgage executive Craig Delany to head its chief investment office more than three months after the discovery of a wayward derivatives trade in the division that caused at least $5.8 billion in losses.

The 41-year-old banker most recently served as chief operating officer of mortgage banking, a job he took on last year to work through JPMorgan's problematic mortgage loans and bank-owned real estate.

In his new role, Delany will report to Co-Chief Operating Officer Matthew Zames and will also remain on the bank's executive committee, according to a memo to JPMorgan employees on Thursday that the company sent to Reuters.

 

Delany's predecessor, Ina Drew, resigned in May and had to return lucrative compensation awards after JPMorgan management discovered the extent of the bad derivatives bet in its $359.1 billion investment portfolio.

Delany's appointment is part of a management shake-up that elevated Zames to his current role in an effort to unwind the large and complex trade and tighten risk-management procedures.

Delany has been with JPMorgan, the biggest U.S. lender, since 1993. He spent most of that time in the investment bank, playing key roles in managing JPMorgan's short-term funding and its acquisition of Bear Stearns during the financial crisis.

As chief investment officer, Delany will oversee the investment of JPMorgan's excess deposits, which have piled up as lending growth has not kept up with depositors' cash.

The CIO division is meant to hedge credit risk from JPMorgan's loan portfolio and is mostly invested in products like government bonds and highly rated mortgage-backed securities, according to disclosures the company made in July.

But with interest rates near historic lows, JPMorgan's CIO traders entered riskier bets to boost returns and did not exit the trades quickly as losses accumulated. Management has been investigating how traders' activities went unchecked, but executives have said that positions may not have been reported appropriately.

In the memo, which was signed by Zames and Co-COO Frank Bisignano, the executives said they have "refocused the Chief Investment Office back to its core mandate of conservative investing, and we have strengthened our risk management and controls."