Zames, rising star at JPMorgan, has seen worst of finance

Matt Zames, who on Sunday became sole chief operating officer at JPMorgan Chase & Co , is no stranger to market calamity.

The 42-year-old traded at Long-Term Capital Management in the late 1990s as it was melting down. He helped stabilize Bear Stearns after JPMorgan took it over during the financial crisis. And when JPMorgan's Chief Investment Office was hemorrhaging money last year from bad credit investments, Zames was told to fix the situation.

Working in such situations has taught Zames a healthy appreciation for what can go wrong, he told Reuters in an interview. "The lessons I learned made me even more conservative in my approach to balance sheet management and risk management," Zames said.

Zames is seen as a leading contender to one day replace Jamie Dimon, 57, as chief executive, along with Michael Cavanagh, the co-chief executive of the company's corporate and investment bank segment and a former chief financial officer. On Sunday, Zames' co-chief operating officer, Frank Bisignano, resigned to become CEO of First Data Corp.

As sole chief operating officer, Zames is leading the drive for what Dimon views as the company's "top priority": improving the systems that track transactions and trades at the bank. Faults in those systems gave rise to the London Whale losses and to orders from regulators in January that the company improve its anti-money laundering processes.

It is a difficult job because it requires global coordination among different businesses, Zames said.

"This is about hiring the right people in the right places around the globe and making sure they have the right qualifications to execute on our plan," Zames told Reuters. "Progress in these types of things is not measured in days or weeks, but quarters, if not longer," he said without addressing his chances of becoming chief executive.

Zames has developed relationships with regulators in recent years, as chairman of the U.S. Treasury Borrowing Advisory Committee. The industry panel of bank and investment fund executives is sanctioned by law to regularly offer Treasury officials views on the economy and how they should manage the U.S. debt.

Those relationships likely helped in May 2012, when Zames was named chief investment officer, from his previous post as co-head of global fixed-income for the investment bank. In July, he and Bisignano were named co-chief operating officers.

Even before he became chief investment officer, Zames said he was inclined to be cautious. When he headed fixed income, he moved JPMorgan's business more toward making money by linking up buyers and sellers of securities, instead of making big bets on bonds and holding onto them.

"It is a much lower risk proposition than taking significant principle risk," Zames said.

(Reporting by David Henry in New York; Editing by Steve Orlofsky)