個案總覽

In October, the CEO of JPMorgan Chase & Co., is preparing for the company's 2010 Q3 earnings conference call and wondering how to address the inevitable questions related to financial reform. It has been just over two months since the Dodd-Frank Financial Reform and Consumer Protection Act (Dodd-Frank Act) was passed, and there is still much uncertainty as to how JPMorgan should address the reforms. JPMorgan had reported stronger than expected EPS in the third quarter, but analysts were more concerned about what strategic initiatives the CEO would implement in response to the Dodd-Frank Act. The act had introduced wide-ranging and industry-changing reforms that were aimed primarily at fully integrated financial institutions such as JPMorgan. While most of the rulemaking would be forthcoming from regulatory authorities, the CEO knows it would be best to address these issues immediately to protect shareholders by avoiding uncertainty.

The Dodd-Frank Act, in response to the preceding financial crisis of 2008-09, fundamentally changed the finance industry and greatly affected its biggest players. This technical note gives an overview of the Dodd-Frank Act, the most important parts of the act (and other regulatory reform), and the affect its reforms could have on the country's largest financial institutions. It is important to note that the Dodd-Frank Act does not necessarily create hard and fast rules but often provides only guidance for regulators to proceed with rule-making activities.

Jason Sterling sat on his hedge fund's Stamford, Connecticut, trading floor on January 28, 2011, scouring the Wall Street Journal and Bloomberg websites for any news coming out of the World Economic Forum's annual meeting in Davos, Switzerland. He knew that the emerging sovereign debt crisis in Europe would be a primary topic of discussion among the world leaders and bankers who had convened at the summit, and he was hoping to find some new information that he could trade on before the close of trading for the week. Sterling's fund traded primarily in sovereign debt, and he needed to figure out if European leaders would be able to come up with a viable solution to the crisis or whether the debt crisis would lead to the default of several European nations. At the forefront of the crisis was Greece, which faced ballooning deficits, rising interest payments, and the prospect of having to default on or restructure its outstanding debt. Ireland, Italy, Portugal, and Spain were the other euro zone countries that faced growing fiscal problems and were the focus of sovereign debt investors. Sterling knew that if a solution was not found in the coming weeks, the sovereign debt markets could be thrown into turmoil.