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JPMorgan to Cut About 100 Subprime Jobs

Reuters
Monday, 26 Nov 2007 | 11:46 AM ET

JPMorgan Chaseplans to cut about 100 subprime mortgage jobs in California amid falling U.S. housing prices and tighter lending standards.

JP Morgan Chase
JP Morgan Chase

JPMorgan disclosed the cuts in a recent filing with the California Employment Development Department. The cuts, effective Dec. 15, will take place at JPMorgan's subprime retail operations center in Ontario, California.

JPMorgan said it has reduced subprime originations and operations staff because of home price weakness and tighter credit standards. About 40 percent of JPMorgan's 2006 subprime originations would not be approved under today's standards, the bank said in a statement.

The bank has discontinued, for example, all subprime home equity loans. JPMorgan has said that it expects to originate about $1 billion subprime loans per month.

Separately, JPMorgan, which has been without a permanent chief risk officer for nearly a year, named Goldman Sachs veteran Barry Zubrow to fill that post as the third-largest U.S. bank navigates around its exposure to leveraged loans.

Zubrow, 54, a former Goldman Sachs chief administrative officer, will join JPMorgan's operating committee and oversee all risk management for the bank.

JPMorgan's former chief risk officer, Don Wilson, retired at the end of last year. Chairman and Chief Executive Jamie Dimon acted as interim chief risk officer.

The bank has escaped the huge write-downs that have hobbled some of its rivals, namely Citigroup and Merrill Lynch. Poor risk management contributed to the recent departures of Merrill CEO Stan O'Neal and Citigroup CEO Chuck Prince.

Still, JPMorgan's exposure to leveraged loans -- the debt used for corporate takeovers -- is substantial. Earlier this month in a regulatory filing, JPMorgan warned that shaky credit markets could trigger write-downs in the current quarter.

The bank's exposure to leveraged loans, risky subprime mortgages and collateralized debt obligations is about $50 million. Its portfolio of held-for-sale leveraged lending commitments stood at $40.6 billion at the end of September.

Zubrow was an executive at Goldman Sachs from 1979 to 2004, working in a number of senior roles. Most recently, he was president of the private investment management firm ITB.

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