Ina Drew, a 30-year veteran of JP Morgan Chase and one of Wall Street's most senior female bankers, quit on Monday as the bank fought to contain massive losses at its London operation.

Jamie Dimon, JP Morgan's chairman and chief executive, said on Sunday there was "no excuse" for the disastrous series of bets it made under the guidance of Drew. On Tuesday Dimon will face angry shareholders who want him to step down as chairman.

Drew's resignation comes as the $2bn (£1.25bn) loss turns into a political row. A White House spokesman said the losses reinforced the importance of Wall Street reform and lambasted Republican presidential candidate Mitt Romney for demanding the repeal of the 2010 Dodd-Frank financial reform legislation.

Barney Frank, co-author of the act, said the fiasco showed how important it is. "It shows how wrong he is in arguing that the legislation is not needed," he told the Guardian. "This isn't a stupid mistake at some poorly run company. It's not some outlier like Countrywide [the fallen subprime mortgage giant]. Dimon is a very able guy. But even in a well-run institution things like this can happen."

Drew was one of the bank's highest-paid staff, earning more than $31m in the past two years. Among her responsibilities as chief investment officer (CIO), she oversaw the bank's London offices and the strategy that led to trader Bruno Iksil becoming known as the London Whale for the huge positions he was taking.

The bank said Drew would retire, without making any mention of her severance package. US law allows banks to claw back bonuses from executives when it discovers that their trades have backfired.

Dimon praised her contribution. "Ina Drew has been a great partner over her many years with our firm. Despite our recent losses … Ina's vast contributions to our company should not be overshadowed by these events," he said in a statement.

The bank would not say if it intends to claw back bonuses she earned while the bank was building up the positions that resulted in these losses.

Drew, a mother of two, became CIO in 2005 and was a close confidante of Dimon. She often featured on lists of the most powerful women in business and was known as a mentor to other women at the bank.

Matt Zames, co-head of the bank's global fixed income unit and head of capital markets, will succeed Drew, JP Morgan said. The bank is still weighing the fate of Iksil, who has been suspended from trading and is currently at home in Paris, and other traders. Achilles Macris, who is in charge of the London-based desk that placed the trades, and the trader Javier Martin-Artajo, a managing director on Macris's team, are also expected to leave.

Rumours were spreading that workers in the London chief investment office, where the losses occurred, were at risk of dismissal. The bank did not comment.

Drew's trading strategy was meant to shield the bank from the ongoing European financial crisis, and involved many complex credit derivative investments.

The size of the bank's investments rattled investors and analysts earlier this year. In April, Dimon dismissed those concerns in a conference call with analysts. Asked about the London Whale, Dimon said: "It's a complete tempest in a teapot. Every bank has a major portfolio and in those portfolios you make investments to offset exposures. Obviously, it is a big portfolio – we are a large company."

Announcing the loss on 10 May, Dimon called the firm's handling of the situation "flawed, complex, poorly reviewed, poorly executed and poorly monitored".

Despite Drew's departure and the likelihood of more to come, pressure remains on Dimon. Regulators on both sides of the Atlantic are now investigating the losses, shareholders are threatening to sue, and US politicians are calling for new regulations to be tightened – regulations of which Dimon has been a vocal critic.

Regulators are currently drafting the so-called "Volcker rule", which would limit the types of trading banks can undertake. Over the weekend, US senator Carl Levin, co-author of the regulation, said Wall Street had successfully watered down the rule. "The issue here is the power of the banks and whether or not we are going to put a cop back on Wall Street," he told NBC's Meet The Press.