13 September 2012

Blythe Masters Appointed to Regulatory Affairs In Addition To Rolling the Dice at JPM

Can a pit boss also be a good casino host?

"Blythe Masters, a widely known figure in the securities industry who oversees JPMorgan's commodities businesses, has been given the additional assignment of running regulatory affairs for the corporate and investment bank under her boss James Staley.

"Having her in this role will be critical to helping us drive the business's strategy in light of changing regulations," Cavanagh and Pinto wrote in the memo.

In her regulatory role, Masters will report to Barry Zubrow, the former chief risk officer who came under the microscope after the bank in early summer reported an expected $6 billion trading loss. Zubrow has been head of the bank's corporate and regulatory affairs office since January."

It appears that Blythe Masters will be dual reporting to James Staley and Barry Zubrow.

Dual reporting is an interesting situation to be in.  It is generally a sign of an unresolved management conflict.

As you may recall, Mr. Zubrow was appointed the head of Regulatory Affairs in January 2012, after the London Whale breeched and then blew up on his watch as Chief Risk Officer, a position now held by a Mr. Hogan.
"John Hogan, who only became chief risk officer in JP Morgan Chase in January, will likely be facing some uncomfortable questions following the bank's revelation yesterday it had made $2bn in trading losses since the beginning of April. Hogan, 46, who previously been head of risk in the investment banking division, replaced Barry Zubrow as chief risk officer for the whole firm in January, when Zubrow took on the newly-created role of head of corporate and regulatory affairs."
Generally people appointed to Regulatory Affairs have some serious background as a regulator. I suspect that as one of the chief risk centers and derivatives jugglers at JPM, Blythe Masters role will be to assess and manage the impact of any government changes in her highly volatile domain. It smells like it could be one of those top down corporate inititatives, generated in response to a crisis and a slide presentation by McKinsey and Company, that look good on flip charts but are useless and awkward in implementation. A trip to Liaison Land.

Or it could be the precursor of a fall from grace.

More change is coming I am sure.

Jamie's Blues