At year-end 2005, almost all of the total assets of Iceland’s banking system were concentrated in just three banks (Glitnir, Kaupthing, and Landsbanki).  These banks were criticized by certain financial analysts in early 2006 for being overly dependent on wholesale funding, much of it...

As a global financial service provider, JPMorgan Chase (JPM) is supervised by banking regulatory agencies in different countries.  Bruno Iksil, the derivatives trader primarily responsible for the $6 billion trading loss in 2012, was based in JPM’s London office.  This office was regulated...

All major financial institutions use various risk limits, metrics, and models to monitor the risk of their activities.  Value at Risk (VaR) is one of the most commonly used ways to measure and monitor market risk.  At JPMorgan Chase (JPM), very large derivative positions established by Bruno...

For many years prior to its demise, Lehman Brothers employed Ernst & Young (EY) as the firm’s independent auditors to review its financial statements and express an opinion as to whether they fairly represented the company’s financial position. EY was supposed to try to detect fraud,...

In December 2013, the primary United States financial regulatory agencies jointly adopted final rules to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is often referred to as the “Volcker Rule”.  Section 619 prohibits banks from engaging in...

After the Basel Committee on Banking Supervision (BCBS) introduced the Basel III framework in 2010, individual countries confronted the question of how best to implement the framework given their unique circumstances.  Switzerland, with a banking industry that is both heavily concentrated and...

The options available to European governments to respond to a multinational bank in financial trouble have been severely limited since each country has its own unique laws and authority applicable to banks operating within its borders. The Bank Recovery & Resolution Directive (BRRD), which was...

JPMorgan Chase (JPM) prided itself on having the best risk management practices in the financial industry, having survived the 2007-2009 financial crisis in better shape than many competitors.  Chief Executive Officer Jamie Dimon often spoke of the bank’s “fortress balance sheet”.  A...

When Lehman Brothers Holdings, Inc. (LBHI) sought Chapter 11 protection, the more than 6,000 counterparties with which its subsidiaries had entered into over 900,000 over-the-counter (OTC) derivatives transactions faced the question of how best to respond to protect their interests. The...

On September 29, 2008 - two weeks after the collapse of Lehman Brothers, the government of Ireland took the bold step of guaranteeing almost all liabilities of the country’s major banks.  The total amount guaranteed by the government was more than double Ireland’s gross domestic product,...