Free Essay

Jp Morgan and Dodd-Frank Act

In: Business and Management

Submitted By akbar892
Words 2780
Pages 12
Q. 1. What were the major factors that led to the recent financial crisis? How did we get here? Answer: One of the primary factors that can be attributed as to have led the recent financial crisis is the financial deregulation allowing financial institutions a lot of freedom in the way they operated. The manifestation of this was seen in the form of: a) Financial innovations that were not backed up with adequate risk controls and management. b) Too much reliance on Quantitative Risk Management ultimately leading to mispricing of risk across different financial and non-financial investments that were the product of the financial innovations made feasible by financial deregulation. c) The influx of liquidity both original and fabricated that led to significant price appreciation particularly in the real estate sector creating real estate bubble. d) The ever increasing prices of assets allowed ever increasing capacity to borrow. e) The sub-prime mortgage market where it was allowed to originate loans of poor credit quality by one player and sell it to others in a mortgage pool. Hence creating an incentive problem where the one who originates poor quality credit did not bear the credit risk for it. f) All these led financial institutions to the fallacy of being “too big to fail”. g) The fallacy that every risk can be quantified and managed led financial institutions into the trap and they started to lend and finance in ways that were unique and complex resulting in exposure risks that were least understood by them. h) The ever increasing financial innovations leading to severe competition among different types of financial institutions for the same buck also played a critical role as well as creating problems of moral hazard and ethics in general.
2. Do you think that the final cost of the government bailout was worth it? Do you think that the initial response was necessary to prevent a collapse of the financial system? Answer: According to the U.S. Department of the Treasury, 8.80 million jobs were lost and $19.2 Trillion were lost in household wealth. The estimated total potential exposure from the financial rescue was estimated to b $24 trillion by the Special Inspector General for TARP in July 2009. The IMF estimated cost of the U.S. response to be $1.90 trillion. If the government had not intervened then, the final cost of the financial crisis would have been much higher than this. The U.S. GDP grew over 2% on average as a result of the comprehensive response and prevented the economy from a total collapse. According to the U.S. Department of the Treasury, a total of $245 billion were disbursed to stabilize the financial institutions and the treasury recovered $264 billion including repayments of $230 billion and $34 billion as realized income in April 2012.
3. How can we prevent this from happening again?

Answer:

A look at the factors that led to the financial crisis gives an idea of what needs to be done to prevent such crisis from happening in future. These include but are not limited to: 1. There should be a limit to financial deregulation and financial innovation particularly in areas where the prevailing risks are least understood. 2. The regulatory regimes must be strengthened and their monitoring and response capabilities enhanced to levels possible subject to being too restrictive and rigid. 3. Risk management systems should be updated and made dynamic continuously to cover both qualitative and quantitative factors. The use of triggers for different responses at different levels of risk exposure should be made an integral part of any risk management systems in place. 4. The incentives in the financial system should be actively monitored and corrective actions taken when needed.

4. What would be a likely solution? Do we need some form of regulation? Do we need this regulation? Why or why not? What are the key points that regulation should address?
How appropriate of a response to the financial crisis was the Dodd-Frank Act? What is the likely impact of the Dodd-Frank Act?

Answer:

The Glass-Steagall Act of 1933 that defined the roles for commercial banks, investments banks and insurance firms was over ridden by the Gramm-Leach-Bliley Act (1999) which repealed the provisions that restricted affiliations in financial institutions. Hence one solution is to overcome the incentive problem and the conflict of interests that arise when financial institutions simultaneously undertake financial activities of varied nature.

In addition to the above the internal incentive to bank should be reduced by requiring greater capital requirements as well as improving upon the definition of what qualifies to be capital. Further in line with the answer to question 3, risk management systems in financial institutions need to be redefined and strengthened to more comprehensively identify, evaluate, manage and monitor risks.

Yes we need to have some form of regulation. The proposed regulation is not bad as it covers most of the recommendations discussed in this write up earlier. It reinforces the regulatory role as outlined earlier and requires improving the capital requirements as well as the risk management systems in place in financial institutions. At the same time the focus is mostly on large, complex financial institutions that have a systematic impact so it allows some flexibility particularly for smaller and medium size financial institutions.

As for as the key points to consider, the regulation that is to be put in place in the financial sector is: 1. Expected to be value adding i.e. must have a specific aim or set of aims to fulfil. In other words the regulation should result in improved regulation and supervision. 2. Increase ambiguity and uncertainty for financial institutions over short term as its usefulness is debated and the implications assessed in the financial sector. 3. To probably result in an acquisition or merger wave in the financial sector. 4. Cost the financial institutions to comply with the requirements of the regulation. 5. To influence the cost of capital of the financial institutions where certain type of financial securities are excluded to qualify as capital and new type of financial securities have been allowed to be considered as Tier 1.

If we compare the factors that are attributed with the financial crisis, we will find that the Dodd-Frank Act does address these factors and hence is an objective response. It covers areas such as incentives and compensation in the financial system and imposes restrictions on compensation for firms receiving TARP in the bailout. The introduction of Orderly Liquidation Authority and Volker Rule are targeted towards the fallacy of “too big to fail”. The Volker Rule and other provisions also limit the means to financial innovation. Newer and tougher capital requirements are introduced and the definition of qualifying capital made stringent. The Financial Stability Oversight Council, enhanced role of SEC and Civil Suit Liability all are aimed to ensure adequate risk management and manage the conflict of interests. With all these pertinent factors being adequately considered by this regulation it can be expected that it will bring stability to the financial system in the future. However, constant monitoring and evaluation are necessary.

5. How effective will the Financial Stability Oversight Council (FSOC) be in regulating large financial institutions and limiting systemic risk?

Answer:

It appears that FSOC will oversee the larger picture of the financial system and its role will have its role contingent on and triggered by financial crisis. Hence it will not be directly supervising financial institutions in any way but will be concerned with the regulators of the financial system in general. Hence the FSOC is in line with the concept of one regulator of all. The role prescribed suggests that it will work as a monitor of the regulators of financial system. In addition it will have concerns only with large financial institutions that have the potential to instigate systematic risk.

The regulation entitles FSOC to oversee other regulators. For example under the regulation FSOC can direct any other regulator to do any required action(s) to prevent any crisis and insure financial stability. In this regard the role of Federal Reserve is of particular importance as FSOC can delegate it the objective to oversee any financial institution considered to be a source of systematic risk.

6. How will the Volcker Rule affect JPMorgan? What strategic initiatives can JPMorgan implement to address the Volcker Rule?

Answer:

Given the size of JPMorgan, the 3% cap should not be a problem. However, the main concern for JPMorgan with respect to the Volker Rule will be its proprietary trading business. Firstly it can simply close out its proprietary business but that will result in reduced revenue and diversification and also depriving itself completely from a potentially profitable line of business. The other way around is a spin-off of its proprietary business but that again is subject to regulations that are even more stringent and involves additional external capital to be raised. However, a relatively attractive and feasible option given the Volker Rule is to shift it proprietary business to its other line of business i.e. asset management. It will subject its trades to clients’ trades. Though it will not lose the proprietary income completely, it will still experience significant fall in it.

7. What effect will the new asset securitization requirements regarding risk retention by originators and securitizers have on financial institutions? On lending?

Answer:

These requirements were specifically given to correct for the incentive problem related with risk origination and risk bearing. Under the new requirements originators of risk will experience a higher level of assets on their balance sheet as it is required that at least 5% of such origination be kept on the balance sheet as an asset. This will increase the capital requirements for such originators of risky assets and hence reduce the incentive for excessive risk taking by such originators who do not ultimately face the consequences of the investment risk. It also implies that lending or credit will be reduced as the originators of credit will not be able to receive full value of the amount lent through securitization. Given these originators will have an active economic exposure to the risks of the credit, it is expected that the quality of assets will improve as well as the credit standards adopted to originate such assets.

8. How will JPMorgan fare in the new environment? Would you consider it a winner or loser?

Answer:

Given the role of FSOC and the other provisions of the Dodd-Frank Act it can be easily ascertained that this regulation is particularly targeted towards financial institutions such as JPMorgan. The implications of the Dodd-Frank Act outlined in the response to question 4 such as lower returns, higher costs and capital requirements as well as enhanced supervision requirements and compliance costs are inevitable realities for JPMorgan in this context. Of these the most significant ramification is the elimination of TRUPs as Tier 1 capital and requires JPMorgan to replace it in the coming year to fulfil the capital requirements. On the positive side, it can be said that every threat is an opportunity at the same time. Given the performance of JPMorgan over the period of financial crisis one would expect it to cash on opportunities offered by the regulation. Mergers and acquisitions are a part of it.

9. What effect will the higher capital requirements have on JPMorgan’s capital and profitability? How should JPMorgan address the new capital requirements? Prior to the
Dodd-Frank Act, what was the purpose of trust preferred securities (TRUPS) and what role did they play for banks? What were their shortcomings? What implications does their exclusion from Tier 1 capital have for JPMorgan and other banks?

Answer:

As JPMorgan has weathered out the most severe of the financial crisis of its time suggesting that it is financial sound and stable and that it has adequate capital to withstand such crisis, it can be expected that the new regulation will not have big affect on JPMorgan’s capital requirements. But it can be expected that the capital requirements will be more individually tailored due to the counter-cyclical provision in the new regulation. One implication is that the capital requirements will become quite volatile given the new regulation’s provisions. Uncertainty prevails regarding how will set the capital requirements and how. One possible way is the use of stress testing to enable the determination of required capital.

However, the new regulation is expected to affect profitability negatively in few ways. First JPMorgan’s proprietary trading business will be affected reducing its profitability as discussed earlier. Second stringent capital requirements and other provisions will reduce the lending function and hence result in lower profitability. There are two ways out to replace the reduced profitability from the regulation. One is to diversify into higher risk line of businesses such as real estate which given the recent history is not an attractive option. However, the second way out is to diversify into activities that are not asset intensive like services based. Due to the elimination of TURPs, JPMorgan and other banks are required to replace them in Tier 1 capital in the near future. For JPMorgan it will not result in financial distress as it is already well capitalized. However, to keep things as they are it may need to replace them in near future.

TURPs were capped at 25% of regulatory capital requirements i.e. Tier 1. They were considered as debt for tax purposes and equity for rating and regulatory requirement. However, they were not as efficient a source of capital for small banks as for large banks. There were four main advantages associated with the use of TURPs: 1. Allowed to raise Tier 1 Capital 2. Cheaper source of Tier 1 Capital 3. Tax deductibility of interest paid on TURPs 4. Considered as equity by rating agencies
The financial crisis also resulted in the collapse of TURPs as they were no better than the banks that originated them. The TURPs and the TURPs pools suffered from the same short comings as the conventional asset back securities did.

10. What is the structure and purpose of contingent convertibles (CoCos)? What is the proper capital structure taking into consideration these securities? How are these securities different from TRUPs? What are the advantages/disadvantages to using these securities? Will they serve their intended purpose? Who will be the investors?

Answer:

The CoCos are proposed to have a structure of convertible bond with mandatory conversions contingent upon pre-specified events e.g. decrease or fall in capital or decline in stock price to a certain level or certain percentage. Given the mandatory conversion the structure could be replicated by a plain vanilla bond and simultaneously selling a put option. In CoCos the conversion is forced and is triggered by a fall in the stock or capital. However, in simple convertible bonds, the conversion is non-mandatory and is contingent upon a rise in the stock.

Historically TURPs had been a cheaper source of capital given they provided downside protection. As CoCos replace them the banks cost of capital are expected to go up as CoCos will have higher interest costs due to their inability to provide downside protection. CoCos are expected to discipline banks in their attitudes towards quasi equity as CoCos have triggers that cannot be played down. Avoiding default and subsequently bankruptcy is the primary advantage with CoCos.

However, CoCos do not result in injecting capital and hence do not solve the problem of liquidity. Further CoCos are debt and hence may not qualify as regulatory capital like TURPs. This will also affect credit ratings by rating agencies. TURPs were considered as equity by rating agency and debt by tax authorities. Hence the ramifications of replacing TURPs with CoCos are unfavourable in many ways for banks. One of the most significant challenge that CoCos will face is their pricing which by the looks of things seems quite complex.

The likely investors could be fixed income investors, hedge funds (arbitrage and distress securities in particular), vulture funds.

11. Who are the winners after the Dodd-Frank Act? Why?

Answer:

The new regulation brings new challenges for large banks and hence also opportunities particularly in terms of consolidation through mergers and acquisitions. Small banks will also marginally benefit as they become more competitive as a result of the increased deposit insurance coverage. Given that the new regulation reinforces and enhances the role of regulators in general and the Federal Reserve in particular, such regulators will experience more power and authority. The general public may expect to see financial stability over longer period!!!!!!!…...

Similar Documents

Free Essay

Sox/Dodd Frank/Jobs Act

...Repeal It is logical to believe that Sarbanes Oxley Act, Dodd Frank Act and JOBS Act exists for a reason. Although politic is a very complicated topic and has some sort of influence in establishing a new federal law, SOX, Dodd Frank Act and JOBS Act are reasonably justifiable. After WorldCom and Enron incidents, Sarbanes Oxley Act was established to regulate auditors and public company. After Late 2000’s mortgage crisis and others, Dodd-Frank and JOBS Act was established to regulate financial industry under federal government. Federal regulation seems like always came after a big crisis or downfalls to fix the issue and hopefully prevent future reoccurrence. However, federal government looked like a little bit too reactive because the regulations were always enacted after something bad happened. To make the matter worse, there is no way to proactively prevent any or all frauds or misconducts from happening due to their variety of types. In order to discuss should Sarbanes Oxley, Dodd Frank and JOBS Act be repealed, let’s look into each Act individually and in a more detail sense, In Sarbanes Oxley, some of the important aspects that SOX 2002 deals with are auditor independence and enhanced financial disclosures. It also established Public Company Accounting Oversight Broad (PCAOB) to monitor and oversee public firm’s financial activities. Because there was lack of Audit regulations, it later leaded to the big Enron fraud. Therefore it was clear that something has to be......

Words: 644 - Pages: 3

Free Essay

Jp Morgan

...and the fame of the institutions involved, to be allowed access to the basic and relevant facts on the investment before making a purchase. The key administrative agencies e.g. SEC require that an investor should be given meaningful information on the financial standing of the securities they are purchasing including what prospects they stand to gain (SEC, 2013). The work of the administrative agencies lies in overseeing the key players in the securities world. It enforces this policy by ensuring that investors have obtained full disclosure of the relevant, meaningful and important market related information, in order to cushion investors against fraudulent deals and gambles. These administrative agencies compile evidence of fraudulent acts done by both individuals and companies, and in enforcing the law; it raises law suits against them. This achieved mostly with heavy reliance on the investors since they are the ones who stand to lose when the deals go sour (Chris, 2013). To achieve the trust and confidence of investors, these organizations endeavor to build a cordial relationship with all the essential players in the securities world, and most importantly, the investors themselves. In a bid to strengthen their grip on all fraudulent dealings and gambles, SEC for instance, has developed a website that offers comprehensive information on securities, and the regulations that govern investment in securities. On top of this, it provides disclosure documents that companies are...

Words: 1973 - Pages: 8

Premium Essay

Jp Morgan

...illegal contract is not a legal agreement and courts will not uphold them. (Bagley, 2012) As consumers we expect the banks to act fairly and accordingly to or best interest. Banks and trusts have a fiduciary duty to consumers. Unfortunately this is not always upheld so we have the duty of good faith and fair dealing. The relationship between a consumer and a bank is generally one of debtor and creditor. Banks have notoriously, in the past, not acted in good faith by approving loans that consumers cannot afford. This breaches the fair dealing by ensuring a consumer that they can feasibly afford to participate in the agreement and enjoy the benefits when in reality the consumer cannot. The duty of good faith and fair dealing is debatable at best and is interpreted in many different lights. (Bagley, 2012) Compare and contrast the differences between intentional and negligent tort actions. Intentional and negligent tort actions have several differences in which we will take a look at. Intentional tort actions occur when harm or injury is intentionally inflicted upon the plaintiff. Intent can be actual or implied. Intentional tort actions can be voluntary by the defendant as well. Assault and battery are the two most common form of intentional tort. Negligent tort is the opposite of intention because it is unintentional or otherwise known as negligent acts. There are several points to prove negligent tort and they are: harm, duty, breach of duty, and casual connection. It......

Words: 1674 - Pages: 7

Premium Essay

Jp Morgan

...Short Essays on the JP Morgan Trading Losses of the summer of 2012 LEG100 10/27/2013 JP Morgan Organizations such as the Securities Exchange Commission and the Commodities Futures Trading Commission are independent agencies that are legally charged with regulating and providing guidelines for the trading and or exchanging of the goods and services within their respective jurisdictions. The Securities Act of 1934 has fully empowered the SEC to do a periodic evaluation of reports from companies that publicly trade their securities. The same act hands the SEC the powers to discipline individuals and entities that are regulated if found in breach of industry rules and regulation (Mahony, 1982). The Commodities Futures Trading Commission on the other hand was created in 1974 to protect individuals, the public and industry players from manipulation, fraud, and potentially abusive practices while at the same time fostering competitiveness, openness and creating markets that are sound (Teall, 2012). There are four basic elements of a contract as Miller (2012) writes. The first important requirement in the formation of a contract is an agreement. In an agreement there should be a party that offers to enter into the legal agreement and another one that accepts the terms of the offer placed. The terms of the contract should contain wording that allows meeting of the minds of both parties that allows them to consciously read and or understand what is in store for......

Words: 1412 - Pages: 6

Premium Essay

Dodd-Frank Act

...repeating itself. The only question was what to do. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), signed into law by President Barack Obama on July 21, 2010, was the proposed answer. The act was the work of Representative Barney Frank (D-MA), Chairman of the Financial Services Committee and Senator Chris Dodd (D-CT), Chairman of the Senate Banking Committee. The purpose of the legislation is “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail,” to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes” (The Dodd-Frank Wall Street Reform and Consumer Protection Act, 2012). While the law officially made it easier for whistleblowers to alert authorities to fraud, the law itself can be seen as unprogressive, rather than progressive, or forward thinking. According to the Association of Certified Fraud Examiners, fraud can cost an average company five percent of their annual revenues, which makes the detection of such fraud a priority for all stakeholders (Brink, Lowe & Victoravich, 2013). Prior to the Dodd-Frank Act, employees could only report instances of fraud internally, which triggered an organization to investigate the tip. This could potentially cause a conflict of interest. An advantage of the Dodd-Frank Act was the Whistleblower Rule, which aimed......

Words: 1173 - Pages: 5

Premium Essay

Jp Morgan

...firms J.P. Morgan, Chase Manhattan, Chemical, Manufacturers Hanover (in New York City) and Bank One, First Chicago, and National Bank of Detroit (in the Midwest) were each closely tied, in their time, to innovations in finance and the growth of the United States and global economies. As JPMorgan Chase & Co does today, these firms also made significant contributions to their local communities. J.P. Morgan Chase & Co. appears in the 2008 Fortune 500 company listing. JPMorgan also leading global financial services firm with assets of $2.4 trillion. The widely considered to the premier trading operation in more than sixty counties and have over 260,000 employees all over the world. Thought, JPMorgan serving 90 million clients in worldwide. Key mergers that shaped who JPMorgan Chase is today: * In 1991, Manufacturers Hanover Corp. merged with Chemical Banking Corp., then the second-largest banking institution in the United States. * In 1995, First Chicago Corp. merged with NBD Bancorp, forming First Chicago NBD, the largest banking institution based in the Midwest. * In 1996, The Chase Manhattan Corp. merged with Chemical Banking Corp, creating what was then the largest bank holding company in the United States. * In 1998, Banc One Corp. merged with First Chicago NBD. Bank One became the largest financial services firm in the Midwest, the fourth-largest bank in the U. S. and the world's largest Visa credit card issuer. * In 2000, J.P. Morgan &......

Words: 5898 - Pages: 24

Premium Essay

Dodd Frank and Sox Act

...the Dodd-Frank and Sarbanes-Oxley Acts have to financial markets and what are the similarities or differences between these Acts. The Dodd-Frank Act was proposed by Representative Barney Frank (D-Mass.) in the House of Representatives and former Senator Chris Dodd (D-Conn.), Chairman of the Senate Banking Committee, in response to the financial and economic crisis witnessed from 2007-2010. Sarbanes-Oxley established heightened standards for the boards and management of both public companies and public accounting firms. The law was passed after the myriad scandals that rocked American securities markets, e.g., Enron, WorldCom, Tyco, and others. Sarbanes-Oxley is wide in scope, establishing numerous responsibilities on the part of corporate boards, with compliance closely monitored by the government.  While employees commonly discover fraud before other monitors, many are reluctant to report it. In an effort to encourage employees to report wrongdoing, Section 301 of the Sarbanes-Oxley Act of 2002 (SOX) requires audit committees of public companies to establish a reporting channel that allows employees to confidentially and anonymously submit claims involving questionable accounting or auditing matters. Despite these internal whistle blowing programs, there is still concern over employee willingness to report wrongdoing. Recently, the Securities and Exchange Commission (SEC) adopted the Dodd-Frank Wall Street Reform and Consumer Protection Act.......

Words: 655 - Pages: 3

Free Essay

Jp Morgan

...always has two reasons for doing anything: a good reason and the real reason.” – J.P. Morgan J.. Morgan Attention To The Detail Contents Origin 1 EARLY YEARS AND FAMILY 2 Forcasting 2 political parties 3 buying property 4 Cash Consolidation 5 Origin JP Morgan is one of the most powerful bankers of his time. J.P. (John Pierpont) Morgan, who died in 1913. He financed railroads and helped organize U.S. Steel, General Electric and other major corporations during his time. He did alot and hadrto go threw a lot as well. The Connecticut native followed his wealthy father into the banking business in the late 1850s, and in 1871 formed a partnership with Philadelphia banker Anthony Drexel. His family was already established. He just added his way of doing thing when his time came along.  In 1895, the firm was reorganized as J.P. Morgan & Company. Morgan used his powerful influence to help level out American financial markets during several economic crises. However, he faced criticism that he had too much power and was accused of manipulating the nation’s financial system for his own gain. I am not sure what he had to gain from doing so. He was already established and famous. Morgan spent a large portion of his wealth amassing a vast art collection. I see it as having a hobby that can generate a great profit the older it gets. EARLY YEARS AND FAMILY John Pierpont Morgan was born into a well known family from New England  on April 17, 1837, in Hartford,......

Words: 1021 - Pages: 5

Free Essay

Dodd-Frank

...The Dodd-Frank Act is a legislation passed as a response to the financial crisis in 2008. It is intended to decrease various risks in the U.S. financial system. Some things it tried to create were the ability to grow jobs, protect consumers and prevent another financial crisis. It was made to restore faith in our financial system and to give Americans confidence that we will figure this crisis out and prevent another one the best we can. The act has established numerous new government agencies to oversee various components of the act. The Financial Stability Oversight Council is supposed to monitor the financial industry as a whole especially on Wall Street. They monitor how stable major firms are and their financial documents. They do this with major firms who if they fail, could have a major negative impact on our economy (companies deemed "too big to fail"). If any of these banks are considered to be too large and could possibly pose a systemic risk, the council has the right to break up the banks. The Financial Stability Oversight Council established the Volcker Rule which prohibits banks from owning or using hedge funds to increase profits. Next they made the The Consumer Financial Protection Bureau. The Consumer Financial Protection Bureau is in charge of credit and debit card companies and mortgage loans. This council is in place to make it easier for consumers to understand the regulations of mortgages. They make sure everyone is alert and clear of......

Words: 500 - Pages: 2

Premium Essay

Dodd-Frank Act of 2010

...Intermediate Accounting I Professor Stubbs Topical Paper 2: Dodd-Frank Act of 2010 In 2008, when the financial crisis occurred, millions of Americans were left without jobs and trillions of dollars of wealth was lost wealth. To make sure the Great Recession would not happen again, President Barrack Obama put into effect the Dodd- Frank Act. With the help of this law, banks will not be able to take irresponsible risks that had negative effects on the American people. Furthermore, with the Volcker Rule embedded into the act, it will ensure that banks are no longer allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. The government will monitor banking activities through the use of the newly created Financial Stability Oversight Council that will work with the Office of Financial Research to use its resources and authority to investigate any it sees fit (CroweHorwath). Additionally, the act creates an instrument for government to shut down failing financially institutions without it creating a financial panic that leaves American taxpayers on the hook for the risky activities done by others. The act promotes market discipline that eliminates the expectation that the government will be there to bail them out in the situation where they fail. As it can be seen by the key provisions of the Dodd-Frank Act, its main purpose is to protect American families from......

Words: 1093 - Pages: 5

Free Essay

Jp Morgan

...FI730 Group Report Financial Institution Analysis 1. Introduction 1.1 JP Morgan & Chase, Co. JP Morgan & Chase, Co., incorporated under Delaware law in 1968, is now one of the oldest and most influential financial institutions in the world. As of December 31, 2013, the firm’s net assets and stockholders’ equity amounted $2.4 trillion and $211.2 billion, respectively. Currently, the firm is the leading banking institution in various business segments that include investment banking, commercial banking, asset management, private equity, and financial services for small businesses and individuals. JP Morgan & Chase, Co. offers financial services through its subsidiaries, divided between principal bank and nonbank subsidiaries. Its principal bank subsidiaries are JPMorgan Chase Bank and Chase Bank USA, which the former, has branches in 23 U.S. states, and the latter, the Firm’s credit card-issuing bank. JP Morgan & Chase, Co.’s nonbank subsidiary is J.P. Morgan Securities LLC (hereinafter referred as JPMorgan Securities), which is the Firm’s investment banking subsidiary in the U.S. Both the bank and nonbank subsidiaries operate domestically and overseas. One of the principal subsidiaries oversea in the United Kingdom (hereinafter referred as U.K.) is called the J.P. Morgan Securities plc, a company that is wholly owned by JPMorgan Chase Bank, N.A. For reporting purposes, JP Morgan & Chase, Co.’s business activities are grouped under four business......

Words: 4507 - Pages: 19

Premium Essay

Dodd Frank

...Dodd-Frank Act and The Consumer Protection Agency. Finance 5000 Webster University Mr. Smith Patrick Overby Overby41@gmail.com/ 915-540-1267 Spring 2 2015 INTRODUCTION The Wall Street Reform and Consumer Protection Act or the Dodd-Frank Act was signed into law in 2010 due the financial collapse of the economy. It provided regulatory protection for the consumer and oversight on how banks issued loans. It provided a blueprint for how to approach to resolving the challenges that the financial markets can create. The framework of the law resembles The New Deal in the 1930s because of the Great Depression. The reforms implemented by the Dodd-Frank Act will have far-reaching effects on the financial system and our economy. The Dodd-Frank Act allows company stockholder to determine the type of compensation packages of that management receive. Businesses must create a committee to assess and decide the amount awarded to their leaders. There are myriad of viewpoints towards Dodd-Frank from the detractors and proponent of the law. Individuals who are against the law believe that it is inflexible and will hurt businesses. The supporters of the law understand that this will limit the power of the financial institution. Dodd-Frank Act In 2008, the country was going through one of the worst financial crisis in history that resembled the Great Depression of the 1930’s. It not only affected the U.S. but also threatened the total collapse of large financial......

Words: 2743 - Pages: 11

Premium Essay

Dodd Frank

...Dodd-Frank Act: Did it Work? Introduction “With the President’s signature, the [Dodd-Frank Act] will mark the greatest legislative change to financial supervision since the 1930s,” according to Margaret Tahyar, partner and member of the New York Financial Institutions Group (Tahyar). Officially signed by Barack Obama on July 21, 2010, the Dodd-Frank Act gave positive hope for the future for financial markets and institutions, being viewed as the “most comprehensive financial reform since the Glass-Steagall Act” (Amadeo). However, since the implementation of the bill, various differing opinions on whether the passing of the act has truly helped or hindered the overall financial economy have prevailed. Dodd-Frank Act Overview Officially signed as the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bill was implemented to change and supervise all financial institutions. More commonly referred to as the Dodd-Frank Act, named after the two legislators who proposed it, Senator Chris Dodd and Congressman Barney Frank, the act was created in result of the Great Recession of 2008 and to rein in large Wall Street companies that contributed to the crisis in order to prevent future devastations (Peirce, Robinson and Stratmann). As of 2014, only a third of the nearly 400 required rules had been finalized and only one third had been proposed (Culp). Kimber Amadeo, a US Economy Expert, provides the eight major regulation changes that were brought about from......

Words: 1189 - Pages: 5

Premium Essay

Dodd Frank Act

...Dodd-Frank Act: Did it Work? Introduction “With the President’s signature, the [Dodd-Frank Act] will mark the greatest legislative change to financial supervision since the 1930s,” according to Margaret Tahyar, partner and member of the New York Financial Institutions Group (Tahyar). Officially signed by Barack Obama on July 21, 2010, the Dodd-Frank Act gave positive hope for the future for financial markets and institutions, being viewed as the “most comprehensive financial reform since the Glass-Steagall Act” (Amadeo). However, since the implementation of the bill, various differing opinions on whether the passing of the act has truly helped or hindered the overall financial economy have prevailed. Dodd-Frank Act Overview Officially signed as the Dodd-Frank Wall Street Reform and Consumer Protection Act, the bill was implemented to change and supervise all financial institutions. More commonly referred to as the Dodd-Frank Act, named after the two legislators who proposed it, Senator Chris Dodd and Congressman Barney Frank, the act was created in result of the Great Recession of 2008 and to rein in large Wall Street companies that contributed to the crisis in order to prevent future devastations (Peirce, Robinson and Stratmann). As of 2014, only a third of the nearly 400 required rules had been finalized and only one third had been proposed (Culp). Kimber Amadeo, a US Economy Expert, provides the eight major regulation changes that were brought about from the......

Words: 1415 - Pages: 6

Premium Essay

Dodd Frank

...11-8-2011 Financial Markets & Inst Dodd-Frank Assignment The Dodd Frank Act has been created as a regulatory reaction from the recent financial crisis. The magnitude of its implications and provisions has not been seen since the great depression and will be conducted as a major overhaul to the financial systems rules. Financial regulation within a system that clearly had ulterior motives and lacked market discipline is inevitable. Without clear transparency of what and how borrowers are investing individuals savings will surely lead to moral hazard and conflicting interests. With Dodd Frank hopefully some of this asymmetric information will be largely more apparent to an inspecting investor. This Act aims to promote the financial stability of the United States financial system by implementing rules and regulations to improve accountability and transparency. Dodd Frank mainly addresses issues dealing with ending the "too big to fail" banks, protecting the American taxpayer by ending bailouts, ensuring consumers safety from abusive financial services practices, and for other related purposes. The legislation gives the government more power to step in and "unwind" financial firms that are failing, enables more oversight of the derivatives market, and to protect the individual investor (Bentley). Thanks to Dodd-Frank, we will see whistleblowers offered incentives for reporting compliance violations to a larger and more powerful SEC. The SEC will also have the power to......

Words: 1288 - Pages: 6

Silikonschlauch, Siliconschlauch, Meterware, lebensmittelecht FDA, ab Ø 3mm neu | Pelea De Maestros | Eps6 Informer - Season 1 (2018)