Reexamining The Volcker Rule After JPMorgan's Derivatives Loss

ByDerek Chipman:In the most recent presidential debate Mitt Romney further expressed his opinion in regards to the Dodd Frank Act. He claimed that if elected, he intends to revoke the act. Although I do not believe the act will be revoked, it is highly probable that he will make amendments to it if elected. This article outlines the current legislation of the Dodd Frank Act and focuses on what effects the Volcker Rule has on some of the nation's largest financial institutions.

In a special conference call this evening Jamie Dimon, CEO of JPMorgan disclosed a "trading loss" of at least $2 billion from a failed hedging strategy. The strategy "morphed over time" and it was "ineffective, poorly monitored, poorly constructed and all of that," said Dimon. Last month, Dimon he denied there were any problems, most likely hoping they would go away or he could cover them up. Instead, Dimon went to the confessional.

Eight more states have joined a lawsuit aimed at challenging the constitutionality of parts of the Dodd-Frank Wall Street Reform and Consumer Protection Act, including the creation of the Consumer Financial Protection Bureau.

Editor’s Note: H. Rodgin Cohen is a partner and senior chairman of Sullivan & Cromwell LLP focusing on acquisition, corporate governance, regulatory and securities law matters. This post is based on a Sullivan & Cromwell LLP publication by Andrew R. Gladin. Summary

By John M. Mason: I have just finished reading the book, "Volcker: The Triumph of Persistence," by William L. Silber. It is an excellent book, well written, and a book that I could not put down. Bill has done a remarkable job in producing this book and it is a well-deserved member of the Financial Times' short list for best business book of the year.

A proposed rule that caps debit card interchange fees has banks fighting mad and retailers hesitantly rejoicing.

By Daryl Montgomery: JPMorgan Chase (JPM) revealed yesterday that one of its traders, Bruno Iksil, was responsible for a $2 billion loss in the last six weeks. Apparently, little has changed since 2008 when the irresponsible activities of the big banks and trading houses almost brought down the world financial system.

By Avery Goodman: Last night, the CEO of JPMorgan Chase (JPM), Jamie Dimon, got on the phone, in an "emergency" conference call, and had a lot of explaining to do. JPM's "London Whale" had managed to loss slightly more than $2 billion on the bank's credit default swaps almost overnight.