Reference no: EM132484766

Point 1: Starting in 2008 with the fall of Bear Stearns and Lehman Brothers, and the seizure of Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) on September 7, 2008, the United States and the global financial system experienced a crisis, the magnitude of which had not been seen since the Great Depression. The period before the near collapse of the financial system was characterized by a sudden increase in asset prices across all areas, but particularly in real estate, where new levels of risk taking were supported by leverage provided by financial institutions and the introduction of many new and complex financial instruments such as collateralized debt obligations (CDOs) and credit default swaps (CDSs). Additionally, the financial system had become more interconnected than ever before, with the result being that the collapse of Bear Stearns and Lehman Brothers, and the seizure of Fannie Mae and Freddie Mac posed a serious threat to the health of the global economy.

Point 2: In response to the drop-off in asset prices and the beginning of the financial meltdown, banks and regulators took drastic actions to stave off a full-blown depression. Banks took enormous write downs on their investments and U.S. regulators alone pledged more than $700 billion to support ailing financial firms. Meanwhile, legislators crafted a sweeping financial reform bill that was passed in July of 2010 and known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

Point 3: This case presents the most important aspects of the Dodd-Frank Act and how they relate to large financial institutions. The case follows Jamie Dimon, CEO of JPMorgan, as he prepares strategic and operational initiatives to address the changes mandated by the Dodd-Frank Act.

Question 1: What were the major factors that led to the recent financial crisis that impact every major country's financial system around the world? How did we get there and3. How can we prevent this from happening again?