History of Our FirmJPMorgan Chase & Co. is one of the
oldest, largest and best-known financial institutions in the world.
The firm's legacy dates back to 1799 when its earliest predecessor
was chartered in New York City.
Our firm is built on the foundation of more than 1200
predecessor institutions. Its major heritage 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.
Key mergers that shaped who JPMorgan Chase is today: In 1991,
Manufacturers Hanover Corp. merged with Chemical Banking Corp.,
under the name of 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., under the
name of The Chase Manhattan Corp., creating what was then the
largest bank holding company in the United States. In 1998, Banc
One Corp. merged with First Chicago NBD, under the name of Bank One
Corp. After a subsequent merger, 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 & Co. Incorporated merged with The Chase Manhattan
Corp., effectively combining four of the largest and oldest money
center banking institutions in New York City (J.P. Morgan, Chase,
Chemical and Manufacturers Hanover) into one firm under the name of
J.P. Morgan Chase & Co. In 2004, Bank One Corp. merged with
J.P. Morgan Chase & Co. The New York Times said the merger
"would realign the competitive landscape for banks" by uniting the
investment and commercial banking skills of J.P. Morgan Chase with
the consumer banking strengths of Bank One. In 2008, JPMorgan Chase
& Co. acquired The Bear Stearns Companies Inc., strengthening
its capabilities across a broad range of businesses, including
prime brokerage, cash clearing and energy trading globally. Also in
2008, JPMorgan Chase & Co. acquired the deposits, assets and
certain liabilities of Washington Mutual's banking operations. This
acquisition expanded Chase's consumer branch network into
California, Florida and Washington State and created the nation's
second-largest branch network with locations reaching 42% of the
U.S. population. In 2010, J.P. Morgan acquired full ownership of
its U.K. joint venture, J.P. Morgan Cazenove, one of Britain's
premier investment banks.WikipediaPhase 1
The JPMorgan Chase & Co. headquarters at 270 Park Avenue,
Manhattan, New York city. New York. US>JPMorgan ChaseThis
article is about JPMorgan Chase & Co. For main subsidiaries,
see Chase (bank) and J.P. Morgan & Co..JPMorgan Chase & Co.
is an American multinational banking and financial services holding
company. It is the largest bank in the United States, with total
assets of US$2.415 trillion. It is a major provider of financial
services, and according to Forbes magazine is the world's third
largest public company based on a composite ranking.[4] The hedge
fund unit of JPMorgan Chase is the second largest hedge fund in the
United States.[5] The company was formed in 2000, when Chase
Manhattan Corporation merged with J.P. Morgan & Co.[6]The J.P.
Morgan brand, historically known as Morgan, is used by the
investment banking, J.P. Morgan Asset Management, private banking,
private wealth management and treasury & securities services
divisions. Fiduciary activity within private banking and private
wealth management is done under the aegis of JPMorgan Chase Bank,
N.A.the actual trustee. The Chase brand is used for credit card
services in the United States and Canada, the bank's retail banking
activities in the United States, and commercial banking. The
corporate headquarters are in 270 Park Avenue, Midtown, Manhattan,
New York City, New York, U.S.; and the retail and commercial bank
is headquartered in Chase Tower, Chicago Loop, Chicago, Illinois,
U.S.[6] JPMorgan Chase & Co. is considered to be a universal
bank.JPMorgan Chase is one of the Big Four banks of the United
States with Bank of America, Citigroup and Wells
Fargo.[7][8][9][10][11][12] According to Bloomberg, as of October
2011, JPMorgan Chase surpassed Bank of America as the largest U.S.
bank by assets.[13] Its predecessor, the Bank of the Manhattan
Company, was the 22nd oldest bank in the world.HistoryJPMorgan
Chase, in its current structure, is the result of the combination
of several large U.S. banking companies since 1996, including Chase
Manhattan Bank, J.P. Morgan & Co., Bank One, Bear Stearns and
Washington Mutual. Going back further, its predecessors include
major banking firms among which are Chemical Bank, Manufacturers
Hanover, First Chicago Bank, National Bank of Detroit, Texas
Commerce Bank, Providian Financial and Great Western Bank.
The JPMorgan Chase logo prior to the 2008 rebranding
As of June 2008, the JPMorgan logo used for the company's
Investment Banking, Asset Management, and Treasury & Securities
Services units.[14]Chemical Banking CorporationThe New York
Chemical Manufacturing Company was founded in 1823 as a maker of
various chemicals. In 1824, the company amended its charter to
perform banking activities and created the Chemical Bank of New
York. After 1851, the bank was separated from its parent and grew
organically and through a series of mergers, most notably with Corn
Exchange Bank in 1954, Texas Commerce Bank (a large bank in Texas)
in 1986, and Manufacturer's Hanover Trust Company in 1991 (the
first major bank merger "among equals"). In the 1980s and early
1990s, Chemical emerged as one of the leaders in the financing of
leveraged buyout transactions. In 1984, Chemical launched Chemical
Venture Partners to invest in private equity transactions alongside
various financial sponsors. By the late 1980s, Chemical developed
its reputation for financing buyouts, building a syndicated
leveraged finance business and related advisory businesses under
the auspices of pioneering investment banker, Jimmy Lee.[15][16] At
many points throughout this history, Chemical Bank was the largest
bank in the United States (either in terms of assets or deposit
market share).In 1996, Chemical Bank acquired Chase Manhattan.
Although Chemical was the nominal survivor, it took the
better-known Chase name. To this day, JPMorgan Chase retains
Chemical's pre-1996 stock price history, as well as Chemical's
former headquarters at 270 Park Avenue.Chase Manhattan BankMain
article: Chase Manhattan Bank
The logo used by Chase following the merger with the Manhattan
Bank in 1954The Chase Manhattan Bank was formed upon the 1955
purchase of Chase National Bank (established in 1877) by the Bank
of the Manhattan Company (established in 1799),[17] the company's
oldest predecessor institution. The Bank of the Manhattan Company
was the creation of Aaron Burr, who transformed The Manhattan
Company from a water carrier into a bank.According to page 115 of
An Empire of Wealth by John Steele Gordon, the origin of this
strand of JPMorgan Chase's history runs as follows:At the turn of
the nineteenth century, obtaining a bank charter required an act of
the state legislature. This of course injected a powerful element
of politics into the process and invited what today would be called
corruption but then was regarded as business as usual. Hamilton's
political enemyand eventual murdererAaron Burr was able to create a
bank by sneaking a clause into a charter for a company, called the
Manhattan Company, to provide clean water to New York City. The
innocuous-looking clause allowed the company to invest surplus
capital in any lawful enterprise. Within six months of the
company's creation, and long before it had laid a single section of
water pipe, the company opened a bank, the Bank of the Manhattan
Company. Still in existence, it is today J. P. Morgan Chase, the
largest bank in the United States.Led by David Rockefeller during
the 1970s and 1980s, Chase Manhattan emerged as one of the largest
and most prestigious banking concerns, with leadership positions in
syndicated lending, treasury and securities services, credit cards,
mortgages, and retail financial services. Weakened by the real
estate collapse in the early 1990s, it was acquired by Chemical
Bank in 1996, retaining the Chase name. Before its merger with J.P.
Morgan & Co., the new Chase expanded the investment and asset
management groups through two acquisitions. In 1999, it acquired
San Francisco-based Hambrecht & Quist for $1.35billion. In
April 2000, UK-based Robert Fleming & Co. was purchased by the
new Chase Manhattan Bank for $7.7billion.J.P. Morgan &
CompanyMain article: J.P. Morgan & Co.
The J.P. Morgan & Co. logo before its merger with Chase
Manhattan Bank in 2000
The J.P. Morgan headquarters in New York City following the
September 16, 1920 bomb explosion that took the lives of 38 and
injured over 400The heritage of the House of Morgan traces its
roots to the partnership of Drexel, Morgan & Co., which in 1895
was renamed J.P. Morgan & Co. (see also: J. Pierpont Morgan).
Arguably the most influential financial institution of its era,
J.P. Morgan & Co. financed the formation of the United States
Steel Corporation, which took over the business of Andrew Carnegie
and others and was the world's first billion dollar corporation. In
1895, J.P. Morgan & Co. supplied the United States government
with $62million in gold to float a bond issue and restore the
treasury surplus of $100million. In 1892, the company began to
finance the New York, New Haven and Hartford Railroad and led it
through a series of acquisitions that made it the dominant railroad
transporter in New England.Built in 1914, 23 Wall Street was known
as the "House of Morgan", and for decades the bank's headquarters
was the most important address in American finance. At noon, on
September 16, 1920, a terrorist bomb exploded in front of the bank,
injuring 400 and killing 38. Shortly before the bomb went off, a
warning note was placed in a mailbox at the corner of Cedar Street
and Broadway. The warning read: "Remember we will not tolerate any
longer. Free the political prisoners or it will be sure death for
all of you. American Anarchists Fighters." While there are many
hypotheses regarding who was behind the bombing and why they did
it, after 20 years of investigation the FBI rendered the case
inactive without ever finding the perpetrators.In August 1914,
Henry P. Davison, a Morgan partner, traveled to the UK and made a
deal with the Bank of England to make J.P. Morgan & Co. the
monopoly underwriter of war bonds for the UK and France. The Bank
of England became a "fiscal agent" of J.P. Morgan & Co., and
vice-versa. The company also invested in the suppliers of war
equipment to Britain and France. Thus, the company profited from
the financing and purchasing activities of the two European
governments.In the 1930s, all of J.P. Morgan & Co. along with
all integrated banking businesses in the United States, was
required by the provisions of the GlassSteagall Act to separate its
investment banking from its commercial banking operations. J.P.
Morgan & Co. chose to operate as a commercial bank, because at
the time commercial lending was perceived as more profitable and
prestigious. Additionally, many within J.P. Morgan believed that a
change in political climate would eventually allow the company to
resume its securities businesses but it would be nearly impossible
to reconstitute the bank if it were disassembled.In 1935, after
being barred from securities business for over a year, the heads of
J.P. Morgan spun off its investment-banking operations. Led by J.P.
Morgan partners, Henry S. Morgan (son of Jack Morgan and grandson
of J. Pierpont Morgan) and Harold Stanley, Morgan Stanley was
founded on September 16, 1935, with $6.6million of nonvoting
preferred stock from J.P. Morgan partners. In order to bolster its
position, in 1959, J.P. Morgan merged with the Guaranty Trust
Company of New York to form the Morgan Guaranty Trust Company. The
bank would continue to operate as Morgan Guaranty Trust until the
1980s, before beginning to migrate back toward the use of the J.P.
Morgan brand. In 1984, the group finally purchased the Purdue
National Corporation of Lafayette Indiana, uniting a history
between the two figures of Salmon Portland Chase and John Purdue.
In 1988, the company once again began operating exclusively as J.P.
Morgan & CoBank One CorporationMain article: Bank One
Corporation
In 2004, JPMorgan Chase merged with Chicago based Bank One
Corp., bringing on board current chairman and CEO Jamie Dimon as
president and COO and designating him as CEO William B. Harrison,
Jr.'s successor. Dimon's pay was pegged at 90% of Harrison's. Dimon
quickly made his influence felt by embarking on a cost-cutting
strategy, and replaced former JPMorgan Chase executives in key
positions with Bank One executivesmany of whom were with Dimon at
Citigroup. Dimon became CEO in January 2006 and Chairman in
December 2006.Bank One Corporation was formed upon the 1998 merger
between Banc One of Columbus, Ohio and First Chicago NBD. These two
large banking companies had themselves been created through the
merger of many banks. This merger was largely considered a failure
until Dimonrecently ousted as President of Citigrouptook over and
reformed the new firm's practicesespecially its disastrous
technology mishmash inherited from the many mergers prior to this
one. Dimon effected changes more than sufficient to make Bank One
Corporation a viable merger partner for JPMorgan Chase.
The First Chicago Bank logoBank One Corporation traced its roots
to First Bancgroup of Ohio, founded as a holding company for City
National Bank of Columbus, Ohio and several other banks in that
state, all of which were renamed "Bank One" when the holding
company was renamed Banc One Corporation. With the beginning of
interstate banking they spread into other states, always renaming
acquired banks "Bank One", though for a long time they resisted
combining them into one bank. After the First Chicago NBD merger,
adverse financial results led to the departure of CEO John B.
McCoy, whose father and grandfather had headed Banc One and
predecessors. Dimon was brought in to head the company. JPMorgan
Chase completed the acquisition of Bank One in the third quarter of
2004. The former Bank One and First Chicago headquarters in Chicago
serve as the headquarters of Chase, JPMorgan Chase's commercial and
retail banking subsidiary.Bear StearnsMain article: Bear
Stearns
The Bear Stearns logoAt the end of 2007, Bear Stearns & Co.
Inc. was the fifth largest investment bank in the United States but
its market capitalization had deteriorated through the second half
of 2007. On Friday, March 14, 2008, Bear Stearns lost 47% of its
equity market value to close at $30.00 per share as rumors emerged
that clients were withdrawing capital from the bank. Over the
following weekend it emerged that Bear Stearns might prove
insolvent, and on or around March 15, 2008, the Federal Reserve
engineered a deal to prevent a wider systemic crisis from the
collapse of Bear Stearns.[citation needed]On March 16, 2008, after
a weekend of intense negotiations between JPMorgan, Bear, and the
federal government, JPMorgan Chase announced that it had plans to
acquire Bear Stearns in a stock swap worth $2.00 per share or
$240million pending shareholder approval scheduled within 90 days.
In the interim, JPMorgan Chase agreed to guarantee all Bear Stearns
trades and business process flows.[18] Two days later on March 18,
2008, JPMorgan Chase formally announced the acquisition of Bear
Stearns for $236million. The stock swap agreement was signed in the
late-night hours of March 18, 2008, with JPMorgan agreeing to
exchange 0.05473 of each of its shares upon closure of the merger
for one Bear share, valuing the Bear shares at $2 each. [19]On
March 24, 2008, after considerable public discontent by Bear
Stearns shareholders over the low acquisition price threatened the
deal's closure, a revised offer was announced at approximately $10
per share. Under the revised terms, JPMorgan also immediately
acquired a 39.5% stake in Bear Stearns (using newly issued shares)
at the new offer price and gained a commitment from the board
(representing another 10% of the share capital) that its members
would vote in favor of the new deal. With sufficient commitments to
ensure a successful shareholder vote, the merger was completed on
June 2, 2008.[citation needed]Washington MutualMain article:
Washington Mutual
The Washington Mutual logo prior to its 2008 acquisition by
JPMorgan ChaseOn September 25, 2008, JPMorgan Chase bought most of
the banking operations of Washington Mutual from the receivership
of the Federal Deposit Insurance Corporation. That night, the
Office of Thrift Supervision, in what was by far the largest bank
failure in American history, had seized Washington Mutual Bank and
placed it into receivership. The FDIC sold the bank's assets,
secured debt obligations and deposits to JPMorgan Chase & Co
for $1.836billion, which re-opened the bank the following day. As a
result of the takeover, Washington Mutual shareholders lost all
their equity.[20]JPMorgan Chase raised $10billion in a stock sale
to cover writedowns and losses after taking on deposits and
branches of Washington Mutual.[21] Through the acquisition,
JPMorgan now owns the former accounts of Providian Financial, a
credit card issuer WaMu acquired in 2005. The company announced
plans to complete the rebranding of Washington Mutual branches to
Chase by late 2009.Chief executive Alan H. Fishman received a
$7.5million sign-on bonus and cash severance of $11.6million after
being CEO for 17 days.[citation needed]2013 settlementOn November
19, 2013, the Justice Department announced that JPMorgan Chase
agreed to pay $13 billion to settle investigations into its
business practices pertaining to mortgage-backed securities.[22] Of
that, $9 billion was penalties and fines and the remaining $4
billion was consumer relief. This was the largest corporate
settlement to date. Much of the alleged wrongdoing stemmed from its
2008 acquisitions of Bear Sterns and Washington Mutual. The
agreement did not settle criminal charges.[23]Other recent
acquisitionsIn 2006, JPMorgan Chase purchased Collegiate Funding
Services, a portfolio company of private equity firm Lightyear
Capital, for $663million. CFS was used as the foundation for the
Chase Student Loans, previously known as Chase Education
Finance.[24]In April 2006, JPMorgan Chase acquired The Bank of New
York Co.'s retail and small business banking network. The
acquisition gave Chase access to 338 additional branches and
700,000 new customers in New York, New Jersey, and Connecticut.In
March 2008, JPMorgan acquired the UK-based carbon offsetting
company ClimateCare.[25]In November 2009, JPMorgan announced it
would acquire the balance of JPMorgan Cazenove, an advisory and
underwriting joint venture established in 2004 with the Cazenove
Group, for GBP1billion.[26]Acquisition historyThe following is an
illustration of the company's major mergers and acquisitions and
historical predecessors (this is not a comprehensive
list):StructureJPMorgan Chase & Co. owns five bank subsidiaries
in the United States:[36] JPMorgan Chase Bank, National
Association; Chase Bank USA, National Association; Custodial Trust
Company; JPMorgan Chase Bank, Dearborn; and J.P. Morgan Bank and
Trust Company, National Association.JPMorgan Chase's activities are
organized, for management reporting purposes, into five business
segments:[37] corporate & investment bank, card services and
consumer lending, commercial banking; personal and business
banking, home lending, asset management, corporate; including
private equity (One Equity Partners) and treasury and corporate
functions.[citation needed] The investment banking division at J.P.
Morgan is divided by teams: industry, M&A and capital markets.
Industry teams include consumer and retail, healthcare, diversified
industries and transportation, natural resources, financial
institutions, metals and mining, real estate and technology, media
and telecommunications.JPMorgan Europe, Ltd.Main article: J.P.
Morgan in the United KingdomThe company, known previously as Chase
Manhattan International Limited, was founded on September 18,
1968.[38][39]In August 2008, the bank announced plans to construct
a new European headquarters, based at Canary Wharf, London.[40]
These plans were subsequently suspended in December 2010, when the
bank announced the purchase of a nearby existing office tower at 25
Bank Street for use as the European headquarters of its investment
bank.[41] 25 Bank Street had originally been designated as the
European headquarters of Enron and was subsequently used as the
headquarters of Lehman Brothers International (Europe).The regional
office is in London with offices in Bournemouth, Glasgow, and
Edinburgh for asset management, private banking, and
investment.[42]Financial dataThis section is outdated. Please
update this article to reflect recent events or newly available
information. (September 2013)
Year2004[43]2005[43]2006[43]2007[44]2008[45]2009
Revenue43,09754,53361,43771,37267,252100,434
EBITDA7,14013,74022,218
Net Income4,4668,48314,44415,3655,60511,728
Employees160,968168,847174,360180,667224,961222,316
Asset & Liability
Asset/Liability Ratio
Net IncomeJPMorgan Chase[46] was the biggest bank at the end of
2008 as an individual bank. (not including
subsidiaries)OperationsEarlier in 2011 the company announced that
by the use of supercomputers, the time taken to assess risk had
been greatly reduced, from arriving at a conclusion within hours to
what is now minutes. The banking corporation uses for this
calculation Field-Programmable Gate Array technology.[47]HistoryThe
Bank began operations in Japan in 1924,[48] in Australia during the
later part of the nineteenth century,[49] and in Indonesia during
the early 1920s.[50] An office of the Equitable Eastern Banking
Corporation (one of J.P. Morgan's predecessors) opened a branch in
China in 1921 and Chase National Bank was established there in
1923.[51] The bank has operated in Saudi Arabia[52] and India[53]
since the 1930s. Chase Manhattan Bank opened an office in Korea in
1967.[54] The firm's presence in Greece dates to 1968.[55] An
office of JPMorgan was opened in Taiwan in 1970,[56] in Russia
(Soviet Union) in 1973,[57] and Nordic operations began during the
same year.[58] Operations in Poland began in
1995.[55]ControversiesIn 2012, JPMorgan Chase & Co was charged
for misrepresenting and failing to disclose that the CIO had
engaged in extremely risky and speculative trades that exposed
JPMorgan to significant losses.[59]Conflicts of interest on
investment researchIn December 2002, Chase paid fines totaling
$80million, with the amount split between the states and the
federal government. The fines were part of a settlement involving
charges that ten banks, including Chase, deceived investors with
biased research. The total settlement with the ten banks was
$1.4billion. The settlement required that the banks separate
investment banking from research, and ban any allocation of IPO
shares.[60]EnronChase paid out over $2billion in fines and legal
settlements for their role in financing Enron Corporation with
aiding and abetting Enron Corp.'s securities fraud, which collapsed
amid a financial scandal in 2001.[61] In 2003, Chase paid
$160million in fines and penalties to settle claims by the
Securities and Exchange Commission and the Manhattan district
attorneys office. In 2005, Chase paid $2.2billion to settle a
lawsuit filed by investors in Enron.[62]WorldComJPMorgan Chase,
which helped underwrite $15.4billion of WorldCom's bonds, agreed in
March 2005 to pay $2billion; that was 46 percent, or $630million,
more than it would have paid had it accepted an investor offer in
May 2004 of $1.37billion. J.P. Morgan was the last big lender to
settle. Its payment is the second largest in the case, exceeded
only by the $2.6billion accord reached in 2004 by Citigroup.[63] In
March 2005, 16 of WorldCom's 17 former underwriters reached
settlements with the investors.[64][65]Jefferson County, AlabamaIn
November 2009, JPMorgan Chase & Co. agreed to a $722million
settlement with the U.S. Securities and Exchange Commission to end
a probe into sales of derivatives that helped push Alabamas most
populous county to the brink of bankruptcy. The settlement came a
week after Birmingham, Alabama Mayor Larry Langford was convicted
on 60 counts of bribery, money laundering, and tax evasion related
to bond swaps for Jefferson County, Alabama. The SEC alleged that
J.P. Morgan, which had been chosen by the county commissioners to
underwrite the floating-rate sewer bond deals and provide
interest-rate swaps, had made undisclosed payments to close friends
of the commissioners in exchange for the deal. J.P. Morgan then
allegedly made up for the costs by charging higher interest rates
on the swaps.[66]Failure to comply with client money rules in the
UKIn June 2010, J.P. Morgan Securities was fined a record
33.32million ($49.12million) by the UK Financial Services Authority
(FSA) for failing to protect an average of 5.5billion of clients'
money from 2002 to 2009.[67][68] FSA requires financial firms to
keep clients' funds in separate accounts to protect the clients in
case such firm becomes insolvent. The firm had failed to properly
segregate client funds from corporate funds following the merger of
Chase and J.P. Morgan, resulting in a violation of FSA regulations
but no losses to clients. The clients' funds would have been at
risk had the firm become insolvent during this period.[69] J.P.
Morgan Securities reported the incident to the FSA, corrected the
errors, and cooperated in the ensuing investigation, resulting in
the fine being reduced 30% from an original amount of
47.6million.[68]Mortgage overcharge of active military personnelIn
January 2011, JPMorgan Chase admitted that it wrongly overcharged
several thousand military families for their mortgages, including
active duty personnel in Afghanistan. The bank also admitted it
improperly foreclosed on more than a dozen military families; both
actions were in clear violation of the Servicemembers Civil Relief
Act which automatically lowers mortgage rates to 6 percent, and
bars foreclosure proceedings of active duty personnel. The
overcharges may have never come to light were it not for legal
action taken by Captain Jonathan Rowles. Both Captain Rowles and
his spouse Julia accused Chase of violating the law and harassing
the couple for nonpayment. An official stated that the situation
was "grim", and Chase initially stated it would be refunding up to
$2,000,000 to those who were overcharged, and that families
improperly foreclosed on have gotten or will get their homes
back.[70] Chase has acknowledged that as many as 6,000 active duty
military personnel were illegally overcharged, and more than 18
military families homes were wrongly foreclosed. In April, Chase
agreed to pay a total of $27million in compensation to settle the
class-action suit.[71] At the company's 2011 shareholders' meeting,
Dimon apologized for the error and said the bank would forgive the
loans of any active-duty personnel whose property had been
foreclosed. In June 2011, lending chief Dave Lowman was forced out
over the scandal.[72][73]Truth in Lending Act litigationIn 2008 and
2009, 14 lawsuits were filed against JPMorgan Chase in various
district courts on behalf of Chase credit card holders claiming the
bank violated the Truth in Lending Act, breached its contract with
the consumers and committed a breach of implied covenant of good
faith and fair dealing. The consumers contended that Chase, with
little or no notice, increased minimum monthly payments from 2% to
5% on loan balances that were transferred to consumers' credit
cards based on the promise of a fixed interest rate. In May 2011,
the United States District Court for the Northern District of
California certified the class action lawsuit. On July 23, 2012,
Chase agreed to pay $100 million to settle the claim.[74]Alleged
manipulation of energy marketIn July 2013, The Federal Energy
Regulatory Commission (FERC) approved a stipulation and consent
agreement under which JPMorgan Ventures Energy Corporation
(JPMVEC), a subsidiary of JPMorgan Chase & Co., agreed to pay
$410 million in penalties and disgorgement to ratepayers for
allegations of market manipulation stemming from the companys
bidding activities in electricity markets in California and the
Midwest from September 2010 through November 2012. JPMVEC agreed to
pay a civil penalty of $285 million to the U.S. Treasury and to
disgorge $125 million in unjust profits. JPMVEC admitted the facts
set forth in the agreement, but neither admitted nor denied the
violations.[75]The case stemed from multiple referrals to FERC from
market monitors in 2011 and 2012 regarding JPMVECs bidding
practices. FERC investigators determined that JPMVEC engaged in 12
manipulative bidding strategies designed to make profits from power
plants that were usually out of the money in the marketplace. In
each of them, the company made bids designed to create artificial
conditions that forced California and Midcontinent Independent
System Operators (ISOs) to pay JPMVEC outside the market at premium
rates.[75]FERC investigators further determined that JPMVEC knew
that the California ISO and Midcontinent ISO received no benefit
from making inflated payments to the company, thereby defrauding
the ISOs by obtaining payments for benefits that the company did
not deliver beyond the routine provision of energy. FERC
investigators also determined that JPMVEC's bids displaced other
generation and altered day ahead and real-time prices from the
prices that would have resulted had the company not submitted the
bids.[75]Under the Energy Policy Act of 2005, Congress directed
FERC to detect, prevent and appropriately sanction the gaming of
energy markets. According to FERC, the Commission approved the
settlement as in the public interest.[75]Criminal investigation
into obstruction of justiceFERC's investigation of energy market
manipulations led to a subsequent investigation into possible
obstruction of justice by employees of JPMorgan Chase.[76] Various
newspapers reported in September 2013 that the Federal Bureau of
Investigation (FBI) and US Attorney's Office in Manhattan were
investigating whether employees withheld information or made false
statements during the FERC investigation.[76] The reported impetus
for the investigation was a letter from Massachusetts Senators
Elizabeth Warren and Edward Markey, in which they asked FERC why no
action was taken against people who impeded the FERC
investigation.[76] At the time of the FBI investigation, the Senate
Permanent Subcommittee on Investigations was also looking into
whether JPMorgan Chase employees impeded the FERC
investigation.[76] Reuters reported that JPMorgan Chase was facing
over a dozen investigations at the time.[76]Sanctions violationsOn
August 25, 2011, JPMorgan Chase agreed to settle fines with regard
to violations of the sanctions under the Office of Foreign Assets
Control (OFAC) regime. The U.S. Department of Treasury released the
following civil penalties information under the heading: "JPMorgan
Chase Bank N.A. Settles Apparent Violations of Multiple Sanctions
Programs":JPMorgan Chase Bank, N.A, New York, NY ("JPMC") has
agreed to remit $88,300,000 to settle potential civil liability for
apparent violations of: the Cuban Assets Control Regulations
("CACR"), 31 C.F.R. part 515; the Weapons of Mass Destruction
Proliferators Sanctions Regulations ("WMDPSR"), 31 C.F.R. part 544;
Executive Order 13382, "Blocking Property of Weapons of Mass
Destruction Proliferators and Their Supporters;" the Global
Terrorism Sanctions Regulations ("GTSR"), 31 C.F.R. part 594; the
Iranian Transactions Regulations ("ITR"), 31 C.F.R. part 560; the
Sudanese Sanctions Regulations ("SSR"), 31 C.F.R. part 538; the
Former Liberian Regime of Charles Taylor Sanctions Regulations
("FLRCTSR"), 31 C.F.R. part 593; and the Reporting, Procedures, and
Penalties Regulations ("RPPR"), 31 C.F.R. part 501, that occurred
between December 15, 2005, and March 1, 2011.U.S. Department of the
Treasury Resource Center, OFAC Recent Actions. Retrieved June 18,
2013.[77]Mortgage-backed securities salesIn August 2013, JPMorgan
Chase announced that it is being investigated by the United States
Department of Justice over its offerings of mortgage-backed
securities leading up to the financial crisis of 200708. The
company said that the Department of justice had preliminarily
concluded that the firm violated federal securities laws in
offerings of subprime and Alt-A residential mortgage securities
during the period 2005 to 2007.[78]"Sons and Daughters" hiring
programIn 2013, the SEC began an investigation of the bank's hiring
practices in China. The bank allegedly made a practice of hiring
the children of the Chinese ruling elite. Spreadsheets kept a
record of how the hires led to business deals. The bank viewed this
as a gateway to doing deals with state-owned companies.[79] The
practice is felt to be widespread in the banking
industry.[80]Madoff fraudFurther information: Madoff investment
scandalJPMorgan Chase and its predecessor, Chemical Bank, had a
relationship with Bernard Madoff from 1986 to 2008 when Madoff
revealed to the FBI that his investment advisory business was a
Ponzi scheme. JPMorgan (and its predecessors) was Madoff's primary
bank in the later years of the fraud.[citation needed]In 2010,
Irving Picard, the trustee charged with recovering the money stolen
by Madoff, sued JPMorgan for failing to prevent Madoff from
defrauding his customers. According to the suit, Chase knew or
should have known that Madoff's wealth management business was a
fraud. However, Chase did not report its concerns to regulators or
law enforcement until October 2008 when it told the UK Serious
Organised Crime Agency that the performance of Madoff's investments
was "too good to be true." The suit also claimed that Chase bankers
were making profitable deals with Madoff even as risk management
executives expressed concern about the nature of Madoff's business.
Almost as seriously, Picard charged that Chemical/Chase's retail
bankers failed to perform even basic oversight of Madoff's banking
activities, despite several transactions dating as far back as the
1990s that raised the appearance of money laundering or check
kiting. Picard argued that even a cursory glance at Madoff's
account activity at Chase would have revealed his business could
not possibly have been legitimate. He also argued that even after
Chase reported its concerns about Madoff's performance to UK
officials, it did not put any restrictions on Madoff's banking
activities until his arrest two months later.[81]In the fall of
2013, JPMorgan began talks with prosecutors and regulators to
settle charges that it turned a blind eye to Madoff's actions. On
January 7, 2014, JPMorgan agreed to pay a total of $2.05 billion in
fines and penalties to settle civil and criminal charges related to
its role in the Madoff scandal. The bank signed a deferred
prosecution agreement the first ever imposed on a major New York
City bank with United States Attorney for the Southern District of
New York Preet Bharara. In the agreement, JPMorgan admitted that it
and its predecessors failed to report illegal activities on
Madoff's part as required by the Bank Secrecy Act as early as 1994.
Bharara filed a two-count criminal information charging JPMorgan
with Bank Secrecy Act violations, but the charges will be dismissed
within two years provided that JPMorgan reforms its anti-money
laundering procedures and cooperates with the government in its
investigation. The bank agreed to forfeit $1.7 billion the largest
forfeiture ever imposed on a bank in American history. The
government will use that money to help make Madoff's victims
whole.JPMorgan also agreed to pay a $350 million fine to the Office
of the Comptroller of the Currency and settle the suit filed
against it by Picard for $543 million.[82][83][84][85]Corruption
investigation in AsiaOn 26 March 2014, the Hong Kong Independent
Commission Against Corruption seized computer records and documents
after searching the office of Fang Fang, the companys outgoing
chief executive officer for China investment
banking.[86]OfficesAlthough the old Chase Manhattan Bank's
headquarters were located at One Chase Manhattan Plaza in downtown
Manhattan, the current world headquarters for JPMorgan Chase &
Co. are located at 270 Park Avenue, Chemical's former
headquarters.The bulk of North American operations take place in
four buildings located adjacent to each other on Park Avenue in New
York City: the former Union Carbide Building at 270 Park Avenue,
the hub of sales and trading operations, and the original Chemical
Bank building at 277 Park Avenue, where most investment banking
activity took place. Asset and wealth management groups are located
at 245 Park Avenue and 345 Park Avenue. Other groups are located in
the former Bear Stearns building at 383 Madison Avenue.Chase, the
U.S. and Canada, retail, commercial, and credit card bank is
headquartered in Chicago at the Chase Tower, Chicago,
Illinois.[6]The Asia Pacific headquarters for JPMorgan is located
in Hong Kong at Chater House.Approximately 11,050 employees are
located in Columbus at the McCoy Center, the former Bank One
offices.The bank moved some of its operations to the JPMorgan Chase
Tower in Houston, when it purchased Texas Commerce Bank.
Phase 2Chase (bank)For the buildings, see Chase Tower (Chicago)
and Chase Manhattan Bank Building.JPMorgan Chase Bank, N.A., doing
business as Chase, is a national bank that constitutes the consumer
and commercial banking subsidiary of the multinational banking
corporation JPMorgan Chase. The bank was known as Chase Manhattan
Bank until it merged with J.P. Morgan & Co. in 2000.[2] Chase
Manhattan Bank was formed by the merger of the Chase National Bank
and the Bank of the Manhattan Company in 1955.[3] The bank is
headquartered in Chicago, since its merger with Bank One
Corporation in 2004.[4] In 2008, the bank acquired the deposits and
most assets of Washington Mutual.Chase offers more than 5,100
branches and 16,100 ATMs nationwide. JPMorgan Chase has 260,965
employees (as of 2012) and operates in more than 85 countries.
JPMorgan Chase currently has assets of approximately $2.509
trillion. British magazine The Banker rated Chase as world's best
bank in 2009-10.[citation needed]JPMorgan Chase, through its Chase
subsidiary, is one of the Big Four banks of the United
States.[5][6]JPMorgan Chase Bank, N.A.
Current logo since 2005.
TypeSubsidiary of JPMorgan Chase
IndustryBanking
FoundedSeptember 1, 1799, as Bank of the Manhattan Company
HeadquartersChase Tower, Chicago, Illinois
Key peopleWilliam C. Weldon(Chairman)[1]
ProductsFinancial services
Revenue$99.99 billion (2012)
Net income$20.53 billion (2012)
Employees260,965 (2012)
ParentJPMorgan Chase
DivisionsRetail Financial Services, Card Services, Commercial
Banking
WebsiteChase.com
History
Aaron Burr, 3rd Vice President of the United States and founder
of The Manhattan Company.
John D. Rockefeller, Jr. and the Rockefeller family were the
largest shareholders of Chase National Bank.From September 1, 1799
to 1877, it was called The Bank of The Manhattan Company (New
York); from 1877 to 1954, it was called Chase National Bank; and
from 1955 to 1976, it was called The Chase Manhattan Bank.[7]
Chase's southwest regional headquarters in Phoenix, Arizona.The
Manhattan CompanyMain article: Bank of the Manhattan CompanyChase
traces its history back to the founding of The Manhattan Company by
Aaron Burr on September 1, 1799, in a house at 40 Wall
Street:[2]After an epidemic of yellow fever in 1798, during which
coffins had been sold by itinerant vendors on street corners, Aaron
Burr established the Manhattan Company, with the ostensible aim of
bringing clean water to the city from the Bronx River but in fact
designed as a front for the creation of New York's second bank,
rivaling Alexander Hamilton's Bank of New York.The Economist[8]Over
two centuries after Burr and Hamilton's now-infamous duel that
claimed Hamilton's life, it can be said that the Bank of the
Manhattan Company ultimately won the "business" side of the
rivalry. In 2006, the modern-day Chase bought the retail banking
division of the Bank of New York, which then only months later
merged with Pittsburgh-based Mellon Financial to form the
present-day BNY Mellon.Chase National BankChase National Bank was
formed in 1877 by John Thompson.[2] It was named after former
United States Treasury Secretary and Chief Justice Salmon P.
Chase,[3] although Chase did not have a connection with the
bank.[2]The Chase National Bank acquired a number of smaller banks
in the 1920s, through its Chase Securities Corporation. In 1926,
for instance, it acquired Mechanics and Metals National Bank.
Specimen Stock CertificateHowever, its most significant
acquisition was the Equitable Trust Company of New York in 1930,
the largest stockholder of which was John D. Rockefeller, Jr.[9]
This made Chase the largest bank in America and indeed, in the
world.Chase was primarily a wholesale bank, dealing with other
prominent financial institutions and major corporate clients, such
as General Electric, which had, through its RCA subsidiary, leased
prominent space and become a crucial first tenant of Rockefeller
Center, rescuing that major project in 1930. The bank is also
closely associated with and has financed the oil industry, having
longstanding connections with its board of directors to the
successor companies of Standard Oil, especially ExxonMobil, which
are also Rockefeller holdings.Merger as Chase Manhattan Bank
The September 1, 1799-1877 logo
The 1877-1954 logo
The 19541960 logo
The 19601976 logoIn 1955, Chase National Bank and The Manhattan
Company merged to create The Chase Manhattan Bank.[2] As Chase was
a much larger bank, it was first intended that Chase acquire the
"Bank of Manhattan", as it was nicknamed, but it transpired that
Burr's original charter for the Manhattan Company had not only
included the clause allowing it to start a bank with surplus funds,
but another requiring unanimous consent of shareholders for the
bank to be taken over. The deal was therefore structured as an
acquisition by the Bank of the Manhattan Company of Chase National,
with John J. McCloy becoming chairman of the merged entity. This
avoided the need for unanimous consent by shareholders.For Chase
Manhattan Bank's new logo, Chermayeff & Geismar designed a
stylized octagon in 1961, which remains part of the bank's logo
today.[10] The Chase logo is a stylized representation of the
primitive water pipes laid by the Manhattan Company, which were
made by nailing together wooden planks.[11]Under McCloy's
successor, George Champion, the bank relinquished its antiquated
1799 state charter for a modern one. In 1969, under the leadership
of David Rockefeller, the bank became part of a bank holding
company, the Chase Manhattan Corporation.[3]Merger with Chemical,
J.P. Morgan
The 19762005 logoIn July 1996, Chemical Bank of New York
purchased Chase Manhattan Bank. Chemical's previous acquisitions
included Manufacturers Hanover Corporation, in 1991, and Texas
Commerce Bank, in 1987. Although Chemical was the nominal survivor,
the merged company retained the Chase name since it was better
known (particularly outside the United States).In December 2000,
the combined Chase Manhattan completed the acquisition of J.P.
Morgan & Co. in one of the largest banking mergers to date. The
combined company was renamed JPMorgan Chase. In 2004, the bank
acquired Bank One, making Chase the largest credit card issuer in
the United States. JPMorgan Chase added Bear Stearns & Co. and
Washington Mutual to its acquisitions in 2009. After closing nearly
400 overlapping branches of the combined company, less than 10% of
its total, Chase will have approximately 5,410 branches in 23
states as of the closing date of the acquisition.[12][13] According
to data from SNL Financial (data as of June 30, 2008), this places
Chase third behind Wells Fargo and Bank of America in terms of
total U.S. retail bank branches. In October 2010, Chase was named
in two lawsuits alleging manipulation of the silver market.[14] The
suits allege that by managing giant positions in silver futures and
options, the banks influenced the prices of silver on the New York
Stock Exchange's Comex Exchange since early 2008.
Chase branch located in Athens, Ohio
Chase bank in Chinatown, Manhattan
Chase offices and branch in One Utah Center tower in Salt Lake
CityThe following is an illustration of the company's major mergers
and acquisitions and historical predecessors to 1995 (this is not a
comprehensive list):
Bank One CorporationMain article: Bank One Corporation
Chase Tower in Chicago is the corporate headquartersIn 2004,
JPMorgan Chase merged with Chicago-based Bank One Corp., bringing
on board its current chairman and CEO Jamie Dimon as president and
COO and designating him as CEO William B. Harrison, Jr.'s
successor. Dimon's pay was pegged at 90% of Harrison's. Dimon
quickly made his influence felt by embarking on a cost-cutting
strategy and replaced former JPMorgan Chase executives in key
positions with Bank One executivesmany of whom were with Dimon at
Citigroup. Dimon became CEO in January 2006 and Chairman in
December 2006 after Harrison's resignation.Bank One Corporation was
formed upon the 1998 merger between Banc One of Columbus, Ohio and
First Chicago NBD. These two large banking companies were
themselves created through the merger of many banks. JPMorgan Chase
completed the acquisition of Bank One in Q3 2004. The merger
between Bank One and JPMorgan Chase meant that corporate
headquarters were now in New York City while the retail bank
operations of Chase were consolidated in Chicago.[15]The following
is an illustration of the Bank One's major mergers and acquisitions
and historical predecessors (this is not a comprehensive
list):Washington MutualMain article: Washington MutualOn September
25, 2008, JPMorgan Chase bought most banking operations of
Washington Mutual from the receivership of the Federal Deposit
Insurance Corporation (FDIC). That night, the Office of Thrift
Supervision, in what was by far the largest bank failure in
American history, seized Washington Mutual Bank and placed it into
receivership. The FDIC sold the bank's assets, secured debt
obligations and deposits to JPMorgan Chase Bank, NA for $1.888
billion, which re-opened the bank the following day. As a result of
the takeover, Washington Mutual shareholders lost all their
equity.[16] Through the acquisition, JPMorgan became owner of the
former accounts of Providian Financial, a credit card issuer WaMu
acquired in 2005. The company completed rebranding of Washington
Mutual branches to Chase in late 2009.Other recent acquisitionsIn
the first-quarter of 2006, Chase purchased Collegiate Funding
Services, a portfolio company of private equity firm Lightyear
Capital, for $663 million. CFS was used as the foundation for the
Chase Student Loans, previously known as Chase Education
Finance.[17]In April of that same year (2006), Chase acquired the
The Bank of New York Co.'s retail and small business banking
network. This gave Chase access to 338 additional branches and
700,000 new customers in New York, New Jersey, Connecticut and
Indiana.ControversiesPurchase of Nazi Germany's Reichsmarks During
WWIIA press release from the National Archives and Records
Administration (NARA) in 2004 announced that many of the new
Federal Bureau of Investigation (FBI) files had become
declassified. This declassification enabled the discovery that
before and during the early years of World War II, the German
government sold a special kind of Reichsmark, known as Rckwanderer
[returnee] Marks, to American citizens of German descent. Chase
National Bank, along with other businesses, were involved in these
transactions. Through Chase, this allowed Nazi sympathizers to
purchase Marks with dollars at a discounted rate. Specifically,
"The financial houses understood that the German government paid
the commissions (to its agents, including Chase) through the sale
of discounted, blocked Marks that came mainly from Jews who had
fled Germany." In other words, Nazi Germany was able to offer these
Marks below face-value because they had been stolen from migrs
fleeing the Nazi regime. Between 1936 and 1941, the Nazis amassed
over $20 million, and the businesses enabling these transactions
earned $1.2 million in commissions. Of these commissions, over
$500,000 went to Chase National Bank and its subagents.These facts
were discovered when the FBI began its investigation in October
1940. The purpose of the investigation was to follow
German-Americans who had bought the Marks. However, Chase National
Banks executives were never federally prosecuted because Chase's
lead attorney threatened to reveal FBI, Army, and Navy "sources and
methods" in court. Publicly naming the sources and methods could
have posed security risks and threatened future intelligence
gathering. To avoid such revelations, the executives' violations of
the Johnson Act, the Espionage Act, and the Foreign Agents
Registration Act were never prosecuted.[18][19][20]Release of Funds
for Nazi Germany During WWIIBesides the controversial Rckwanderer
Mark Scheme, NARA records also revealed another controversy during
the occupation of France by the Nazis. From the late 1930s until
June 14, 1941, when President Franklin D. Roosevelt (FDR) issued an
Executive Order freezing German assets, Chase National Bank worked
with the Nazi government. The order blocking any access to French
accounts in the U.S. by anyone, but especially by the Nazis was
issued by Secretary of the Treasury, Henry Morgenthau Jr., with the
approval of FDR. Unfortunately, within hours of the order, Chase
unblocked the accounts and the funds were transferred through South
America to Nazi Germany.[20]Refusal to release funds belonging to
Jews in Occupied FranceUS Treasury officials wanted an
investigation of French subsidiaries of American banks, such as
Chase Bank, J.P. Morgan & Co, National City Corporation,
Guaranty Bank, Bankers Trust, and American Express. Of these banks,
only Chase and Morgan remained open in France during the Nazi
occupation. The Chase branch chief in Paris, France, Carlos
Niedermann, told his supervisor in New York that there had been an
"expansion of deposits". Also, Niedermann was, "very vigorous in
enforcing restrictions against Jewish property, even going so far
as to refuse to release funds belonging to Jews in anticipation
that a decree with retroactive provisions prohibiting such release
might be published in the near future by the occupying Nazi
authorities".In 1998, Chase general counsel William McDavid, said
that Chase did not have control over Niedermann. Whether that claim
was true or not, Chase Manhattan Bank acknowledged seizing about
100 accounts during the Vichy regime. Kenneth McCallion, an
attorney, led a lawsuit against Barclays Bank for the illegal
seizure of assets during WWII and has since turned his attention
toward Chase. The World Jewish Congress (WJC), entered into
discussions with Chase and a spokesperson for the WJC said, "Nobody
at Chase today is guilty. They were not involved in whatever
happened, but they do accept that they have an institutional
responsibility." A Chase spokesman said, "This is a moral issue
that we take very seriously." Chase general counsel McDavid added,
"that Chase intends to compensate Jewish account holders whose
assets were illegally plundered". In 1999, the French government
formed a commission to report findings to Prime Minister Lionel
Jospin. Claire Andrieu, a commission member and history professor
at the Sorbonne, said that under the Vichy regime, French banks
received visits from Nazi officials but U.S. banks did not. At that
time, they did not have to report Jewish accounts, but they did
just as the French banks did. She goes on to say that an American
ambassador protected the U.S. subsidiaries.[21][22] [23] [24]Recent
ControversiesJPMorgan Chase has paid $16 billion in fines,
settlements and other litigation expenses in just the last four
years (2011-2013). Of the $16 billion JPMorgan Chase has shelled
out, about $8.5 billion were for fines and settlements resulting
from illegal actions taken by bank executives, according to Richard
Eskow at the Campaign for Americas Future, who cited a new report
from Joshua Rosner of Graham Fisher & Co.The $16 billion total
does not include a recent settlement that calls for JPMorgan Chase
to pay $100 million to waive $417 million in claims it had made
against clients of the firm MF Global.The U.S. Treasurys Office of
Foreign Assets Control found that JPMorgan had illegally aided
dictatorships in Cuba, Sudan, Liberia and Iran, including
transferring 32,000 ounces of gold bullion for an Iranian
bank.Among its other transgressions, JPMorgan has been found to
have misled investors engaged in fictitious trades collected
illegal flood insurance commissions wrongfully foreclosed on
soldiers, charged veterans hidden fees for refinancing violated the
Federal Trade commission Act by making false statements to people
seeking automobile loans illegally increased their collection of
overdraft fees by processing large transactions before smaller ones
helped drive Jefferson County, Alabama, into bankruptcy by
switching its fixed-rate debt to variable violated antitrust
provision of the Sherman Act relating to bid
rigging.[25][26][27][28][29][30Phase 3J.P. Morgan & Co.From
Wikipedia, the free encyclopedia"House of Morgan" redirects here.
For the building, see 23 Wall Street. For the Welsh dynasty
descended from Morgan Hen, see kings of Morgannwg.See also:
JPMorgan Chaseand J. P. MorganJ.P. Morgan & Co.
TypeSubsidiary
IndustryInvestment banking
FateAcquired by Chase Manhattan Bank in 2000
Founded1871
Founder(s)J. P. Morgan
HeadquartersNew York City, New York, US
Employees26,314 (2010)
ParentJPMorgan Chase
WebsiteJPMorgan.com
J.P. Morgan & Co. was a commercial and investment banking
institution based in the United States founded by J. Pierpont
Morgan and commonly known as the House of Morgan or simply
Morgan.Today, J.P. Morgan is the wholesale banking arm of JPMorgan
Chase.The firm is a direct predecessor of two of the largest
banking institutions in the United States and globally, JPMorgan
Chase and Morgan Stanley.In 2000, J.P. Morgan was acquired by Chase
Manhattan Bank to form JPMorgan Chase & Co., one of the largest
global banking institutions. Today, the J.P. Morgan brand is used
to market certain JPMorgan Chase wholesale businesses, including
investment banking, commercial banking and asset management. The
J.P. Morgan branding was revamped in 2008 to return to its more
traditional appearance after several years of depicting the "Chase
symbol to the right of a condensed and modernized
"JPMorgan".Between 1959 and 1989, J.P. Morgan operated as the
Morgan Guaranty Trust, following its merger with the Guaranty Trust
Company of New York.
HistoryEarly history
23 Wall Street. Former headquarters of J.P. Morgan & Co.The
origins of the firm date back to 1854 when Junius S. Morgan joined
George Peabody & Co. (which became Peabody, Morgan & Co.),
a London-based banking business headed by George Peabody. Junius
took control of the firm, changing its name to J.S. Morgan &
Co. in 1864 on Peabody's retirement. Junius's son, J. Pierpont
Morgan, first apprenticed at Duncan, Sherman and Company in New
York City, then founded his own firm with a cousin, J. Pierpont
Morgan & Company, in 1862. J. Pierpont Morgan & Company
traded in government bonds and foreign exchange. It also acted as
an agent for Peabodys. Junius, however, considered some of
Pierponts ventures to be highly speculative. So, Pierpont took on a
more senior partner and the firm was known first as Dabney, Morgan
and Company (beginning in 1864), then Drexel, Morgan & Co. (in
1871). In these firms, Pierpont used his Peabody connection to
bring British financial capital together with rapidly growing U.S.
industrial firms, such as railroads, who needed financial
capital.[1] The Drexel of Drexel, Morgan & Co. was Philadelphia
banker Anthony J. Drexel, founder of what is now Drexel
University.[2]The House of MorganOn Junius death in 1890, Pierpont
Morgan took his place at J.S. Morgan and Company. After Drexels
death, Drexel, Morgan reorganized in 1895 and became J.P. Morgan
and Company, eventually becoming one of the most powerful banking
companies in the world and helping to transform the United States
from an economic novice into the strongest industrial power in the
world at that time.[1] It financed the formation of the United
States Steel Corporation, which took over the business of Andrew
Carnegie and others and was the world's first billion-dollar
corporation. In 1895, it supplied the United States government with
$62 million in gold to float a bond issue and restore the treasury
surplus of $100 million. In 1892, the company began to finance the
New York, New Haven and Hartford Railroad and led it through a
series of acquisitions that made it the dominant railroad
transporter in New England.
September 16, 1920: a bomb exploded in front of the headquarters
of J.P. Morgan Inc. at 23 Wall Street, injuring 400 and killing 38
people.Built in 1914, 23 Wall Street was known as "The Corner" and
"The House of Morgan," and for decades the bank's headquarters was
the most important address in American finance. At noon, on
September 16, 1920, an anarchist bomb exploded in front of the
bank, killing 38 and injuring 400. Shortly before the bomb went
off, an unknown person placed a warning note in a mailbox at the
corner of Cedar Street and Broadway. The warning read: "Remember we
will not tolerate any longer. Free the political prisoners or it
will be sure death for all of you. American Anarchists Fighters."
While theories abound about who was behind the Wall Street bombing
and why they did it, after twenty years of investigation the FBI
rendered the file inactive in 1940 without ever finding the
perpetrators.In August 1914, Henry P. Davison, a Morgan partner,
traveled to the United Kingdom and made a deal with the Bank of
England to make J.P. Morgan & Co. the sole underwriter of war
bonds for the UK and France. The Bank of England became a fiscal
agent of J.P. Morgan & Co., and vice versa. The company also
invested in the suppliers of war equipment to Britain and France,
thus profiting from the financing and purchasing activities of the
two European governments.During the early 1920s, J.P. Morgan &
Co. was active in promoting banks in the southern hemisphere,
including the Bank of Central and South America.GlassSteagall and
Morgan StanleyIn 1933, the provisions of the GlassSteagall Act
forced J.P. Morgan & Co. to separate its investment banking
from its commercial banking operations. J.P. Morgan & Co. chose
to operate as a commercial bank, because after the stock market
crash of 1929, investment banking was in some disrepute and
commercial lending was perceived to be more the profitable and
prestigious business. Additionally, many within J.P. Morgan
believed that a change in the political climate would allow the
company to resume its securities businesses but that it would be
nearly impossible to reconstitute the bank if it were
disassembled.In 1935, after being barred from securities business
for over a year, the heads of J.P. Morgan made the decision to spin
off its investment banking operations. Two J.P. Morgan partners,
Henry S. Morgan (son of Jack Morgan and grandson of J. Pierpont
Morgan) and Harold Stanley, founded Morgan Stanley on September 16,
1935 with $6.6 million of nonvoting preferred stock from J.P.
Morgan partners. At the beginning, Morgan Stanley's headquarters
were at 2 Wall Street, just down the street from J.P. Morgan, and
Morgan Stanley bankers routinely used 23 Wall Street when closing
transactions.
Morgan Guaranty logo ca. 1976Morgan Guaranty TrustIn the years
following the spin-off of Morgan Stanley, the securities business
proved robust, while the parent firm, which incorporated in
1940,[3] was a little sleepy. By the 1950s J.P. Morgan was only a
mid-size bank. In order to bolster its position, in 1959, J.P.
Morgan merged with the Guaranty Trust Company of New York to form
the Morgan Guaranty Trust Company. The two banks already had
numerous relationships between them and had complementary
characteristics as J.P. Morgan brought a prestigious name and high
quality clients and bankers while Guaranty Trust brought a
significant amount of capital. Although Guaranty Trust was nearly
four times the size of J.P. Morgan at the time of the merger in
1959, J.P. Morgan was considered the buyer and nominal survivor and
former J.P. Morgan employees were the primary managers of the
merged company.Return of J.P. Morgan & Co.
J.P. Morgan & Co. logo prior to its merger with Chase
Manhattan Bank in 2000Ten years after the merger, Morgan Guaranty
established a bank holding company called J.P. Morgan & Co.
Incorporated, but continued to operate as Morgan Guaranty through
the 1980s before beginning to migrate back to use of the J.P.
Morgan brand. In 1988, the company once again began operating
exclusively as J.P. Morgan & Co.Also in the 1980s, J.P. Morgan
along with other commercial banks pushed the envelope of product
offerings toward investment banking, beginning with the issuance of
commercial paper. In 1989, the Federal Reserve permitted J.P.
Morgan to be the first commercial bank to underwrite a corporate
debt offering[4] In the 1990s, J.P. Morgan moved quickly to rebuild
its investment banking operations and by the late 1990s would
emerge as a top-five player in securities underwriting.JPMorgan
Chase
JPMorgan logo prior to its 2008 rebrandingBy the late 1990s,
J.P. Morgan had emerged as a large but not dominant commercial and
investment banking franchise with an attractive brand name and a
strong presence in debt and equity securities underwriting.
Beginning in 1998, J.P. Morgan openly discussed the possibility of
a merger, and speculation of a pairing with banks including Goldman
Sachs, Chase Manhattan Bank, Credit Suisse and Deutsche Bank AG was
prevalent.[5] Chase Manhattan had emerged as one of the largest and
fastest growing commercial banks in the United States through a
series of mergers over the previous decade. In 2000 Chase, which
was looking for yet another transformational merger to improve its
position in investment banking, merged with J.P. Morgan to form
JPMorgan Chase & Co.[6][7]The combined JPMorgan Chase would
become one of the largest banks both in the United States and
globally offering a full complement of investment banking,
commercial banking, retail banking, asset management, private
banking and private equity businesses. In 2011, JPMorgan Asset
Management was ranked number two in Institutional Investor's Hedge
Fund 100 ranking, with $54.2 billion in assets under
management.[8]2012 Trading lossesMain article: 2012 JPMorgan Chase
trading lossExecutives from JP Morgan Chase & Co were embroiled
in the 2012 London Whale scandal, facing potential charges over a
trading debacle that cost the bank more than $6.2 billion. The
firms two former traders, Javier Martin-Artajo and Julien Grout,
were accused of deliberately understating losses on trades in the
firms books.[9]
Phase 4J. P. MorganFrom Wikipedia, the free encyclopediaThis
article is about the 18371913 American financier. For the modern
company, see JPMorgan Chase. For the historical banking
institution, see J.P. Morgan & Co.. For other people of the
same name, see J. P. Morgan (disambiguation).John Pierpont "J. P."
Morgan (April 17, 1837 March 31, 1913) was an American financier,
banker, philanthropist and art collector who dominated corporate
finance and industrial consolidation during his time. In 1892
Morgan arranged the merger of Edison General Electric and
Thomson-Houston Electric Company to form General Electric. After
financing the creation of the Federal Steel Company, he merged in
1901 with the Carnegie Steel Company and several other steel and
iron businesses, including Consolidated Steel and Wire Company
owned by William Edenborn, to form the United States Steel
Corporation.Morgan died in Rome, Italy, in his sleep in 1913 at the
age of 75, leaving his fortune and business to his son, John
Pierpont "Jack" Morgan, Jr., and bequeathing his mansion and large
book collections to The Morgan Library & Museum in New York.At
the height of Morgan's career during the early 1900s, he and his
partners had financial investments in many large corporations and
had significant influence over the nation's high finance. He
directed the banking coalition that stopped the Panic of 1907. He
was the leading financier of the Progressive Era, and his
dedication to efficiency and modernization helped transform
American businessChildhood and educationJ. P. Morgan was born and
raised in Hartford, Connecticut, to Junius Spencer Morgan
(18131890) and Juliet Pierpont (18161884) of Boston, Massachusetts.
Pierpont, as he preferred to be known, had a varied education due
in part to interference by his father, Junius. In the fall of 1848,
Pierpont transferred to the Hartford Public School and then to the
Episcopal Academy in Cheshire, Connecticut, (now called Cheshire
Academy), boarding with the principal. In September 1851, Morgan
passed the entrance exam for the English High School of Boston, a
school specializing in mathematics to prepare young men for careers
in commerce.In the spring of 1852, illness that was to become more
common as his life progressed struck; rheumatic fever left him in
so much pain that he could not walk. Junius sent Pierpont to the
Azores in order for him to recover. After convalescing for almost a
year, Pierpont returned to the English High School in Boston to
resume his studies. After graduating, his father sent him to
Bellerive, a school near the Swiss village of Vevey. When Morgan
had attained fluency in French, his father sent him to the
University of Gttingen in order to improve his German. Attaining a
passable level of German within six months and also a degree in art
history, Morgan traveled back to London via Wiesbaden, with his
education complete.[1CareerEarly years and life
J. P. Morgan in his earlier yearsMorgan went into banking in
1857 at the London branch of merchant banking firm, Peabody, Morgan
& Co., a partnership between his father and George Peabody
founded three years earlier. In 1858 he moved to New York City to
join the banking house of Duncan, Sherman & Company, the
American representatives of George Peabody and Company. During the
American Civil War, Morgan purchased five thousand defective rifles
from an army arsenal at $3.50 each[2] and then resold them to a
field general for $22 each.[2] Morgan had avoided serving during
the war by paying a substitute $300 to take his place.[2] From 1860
to 1864, as J. Pierpont Morgan & Company, he acted as agent in
New York for his father's firm, renamed "J.S. Morgan & Co."
upon Peabody's retirement in 1864. From 1864 to 1872, he was a
member of the firm of Dabney, Morgan, and Company. In 1871, he
partnered with the Drexels of Philadelphia to form the New York
firm of Drexel, Morgan & Company. Anthony J. Drexel became
Pierpont's mentor at the request of Junius Morgan.J.P. Morgan &
CompanyMain article: J.P. Morgan & Co.After the 1893 death of
Anthony Drexel, the firm was rechristened "J. P. Morgan &
Company" in 1895, and retained close ties with Drexel & Company
of Philadelphia, Morgan, Harjes & Company of Paris, and J.S.
Morgan & Company (after 1910 Morgan, Grenfell & Company),
of London. By 1900, it was one of the most powerful banking houses
of the world, carrying through many deals especially
reorganizations and consolidations. Morgan had many partners over
the years, such as George W. Perkins, but remained firmly in
charge.[3]Modernizing managementMorgan's process of taking over
troubled businesses to reorganize them was known as
"Morganization".[4] Morgan reorganized business structures and
management in order to return them to profitability. His reputation
as a banker and financier also helped bring interest from investors
to the businesses he took over.[5]NewspapersIn 1896, Adolph Simon
Ochs, who owned the Chattanooga Times, secured financing from
Morgan to purchase the financially struggling New York Times. It
became the standard for American journalism by cutting prices,
investing in news gathering, and insisting on the highest quality
of writing and reporting.[6]Treasury goldIn 1895, at the depths of
the Panic of 1893, the Federal Treasury was nearly out of gold.
President Grover Cleveland accepted Morgan's offer to join with the
Rothschilds and supply the U.S. Treasury with 3.5million ounces of
gold[7] to restore the treasury surplus in exchange for a 30-year
bond issue. The episode saved the Treasury[8] but hurt Cleveland
with the agrarian wing of the Democratic Party and became an issue
in the election of 1896, when banks came under a withering attack
from William Jennings Bryan. Morgan and Wall Street bankers donated
heavily to Republican William McKinley, who was elected in 1896 and
reelected in 1900.SteelAfter the death of his father in 1890,
Morgan took control of J. S. Morgan & Co. which was renamed
Morgan, Grenfell & Company in 1910. Morgan began talks with
Charles M. Schwab, president of Carnegie Co., and businessman
Andrew Carnegie in 1900. The goal was to buy out Carnegie's steel
business and merge it with several other steel, coal, mining and
shipping firms to create the United States Steel Corporation. His
goal was almost completed in late 1900 while negotiating a deal
with Robert D. Tobin and Theodore Price III, but was then retracted
immediately. In 1901 U.S. Steel was the first billion-dollar
company in the world, having an authorized capitalization of $1.4
billion, which was much larger than any other industrial firm and
comparable in size to the largest railroads.U.S. Steel aimed to
achieve greater economies of scale, reduce transportation and
resource costs, expand product lines, and improve distribution.[9]
It was also planned to allow the United States to compete globally
with Britain and Germany. U.S. Steel's size was claimed by Charles
M. Schwab and others to allow the company to pursue distant
international markets-globalization.[9] U.S. Steel was regarded as
a monopoly by critics, as the business was attempting to dominate
not only steel but also the construction of bridges, ships,
railroad cars and rails, wire, nails, and a host of other products.
With U.S. Steel, Morgan had captured two-thirds of the steel
market, and Schwab was confident that the company would soon hold a
75 percent market share.[9] However, after 1901 the businesses'
market share dropped. Schwab resigned from U.S. Steel in 1903 to
form Bethlehem Steel, which became the second largest U.S. producer
on the strength of such innovations as the wide flange "H"
beamprecursor to the I-beamwidely used in construction.
Morgan's role in the economy was denounced as overpowering in
this hostile political cartoonLabor policy was a contentious issue.
U.S. Steel was non-union and experienced steel producers, led by
Schwab, wanted to keep it that way with aggressive tactics to
identify and root out "trouble makers". The lawyers and bankers who
had organized the merger, notably Morgan and the CEO Elbert "Judge"
Gary were more concerned with long-run profits, stability, good
public relations, and avoiding trouble. The bankers' views
generally prevailed, and the result was a paternalistic labor
policy. U.S. Steel was finally unionized in the late
1930s.[10]Panic of 1907The Panic of 1907 was a financial crisis
that almost crippled the American economy. Major New York banks
were on the verge of bankruptcy and there was no mechanism to
rescue them until Morgan stepped in personally and took charge,
resolving the crisis.[11][12] Treasury Secretary George B.
Cortelyou earmarked $35 million of federal money to quell the storm
but had no easy way to use it. Morgan now took personal charge,
meeting with the nation's leading financiers in his New York
mansion; he forced them to devise a plan to meet the crisis. James
Stillman, president of the National City Bank, also played a
central role. Morgan organized a team of bank and trust executives
which redirected money between banks, secured further international
lines of credit, and bought plummeting stocks of healthy
corporations. A delicate political issue arose regarding the
brokerage firm of Moore and Schley, which was deeply involved in a
speculative pool in the stock of the Tennessee Coal, Iron and
Railroad Company. Moore and Schley had pledged over $6 million of
the Tennessee Coal and Iron (TCI) stock for loans among the Wall
Street banks. The banks had called the loans, and the firm could
not pay. If Moore and Schley should fail, a hundred more failures
would follow and then all Wall Street might go to pieces. Morgan
decided they had to save Moore and Schley. TCI was one of the chief
competitors of U.S. Steel and it owned valuable iron and coal
deposits. Morgan controlled U.S. Steel and he decided it had to buy
the TCI stock from Moore and Schley. Judge Gary, head of U.S.
Steel, agreed, but was concerned there would be antitrust
implications that could cause grave trouble for U.S. Steel, which
was already dominant in the steel industry. Morgan sent Gary to see
President Theodore Roosevelt, who promised legal immunity for the
deal. U.S. Steel thereupon paid $30 million for the TCI stock and
Moore and Schley was saved. The announcement had an immediate
effect; by November 7, 1907, the panic was over. Vowing to never
let it happen again, and realizing that in a future crisis there
was not likely to be another Morgan, banking and political leaders,
led by Senator Nelson Aldrich devised a plan that became the
Federal Reserve System in 1913.[13] The crisis underscored the need
for a powerful mechanism, and Morgan supported the move to create
the Federal Reserve System.CriticsWhile conservatives in the
Progressive Era hailed Morgan for his civic responsibility, his
strengthening of the national economy, and his devotion to the arts
and religion, the left wing viewed him as one of the central
figures in the system it rejected.[14] Morgan redefined
conservatism in terms of financial prowess coupled with strong
commitments to religion and high culture.[15]Enemies of banking
attacked Morgan for the terms of his loan of gold to the federal
government in the 1895 crisis and for the financial resolution of
the Panic of 1907. They also attempted to attribute to him the
financial ills of the New York, New Haven and Hartford Railroad. In
December 1912, Morgan testified before the Pujo Committee, a
subcommittee of the House Banking and Currency committee. The
committee ultimately concluded that a small number of financial
leaders was exercising considerable control over many industries.
The partners of J.P. Morgan & Co. and directors of First
National and National City Bank controlled aggregate resources of
$22.245billion, which Louis Brandeis, later a U.S. Supreme Court
Justice, compared to the value of all the property in the
twenty-two states west of the Mississippi River.[16]Unsuccessful
venturesMorgan did not always invest well, as several failures
demonstrated.Tesla and WardenclyffeIn 1900 Morgan invested $150,000
in inventor Nikola Tesla's Wardenclyffe Tower, a high power
transatlantic wireless communication project. By 1903 Tesla had
spent the initial investment without completing the project, and
with Guglielmo Marconi already making regular transatlantic radio
transmissions with far less expensive equipment, Morgan declined to
fund Tesla any further. Tesla tried to generate more interest in
Wardenclyffe by revealing its ability to transmit wireless
electricity, but the loss of Morgan as a backer, and the 1903 "rich
man's panic" on Wall Street, dried up any further
investment.[17][18][19]London SubwaysMorgan suffered a rare
business defeat in 1902 when he attempted to enter the London
Underground field. Transit magnate Charles Tyson Yerkes thwarted
Morgan's effort to obtain parliamentary authority to build an
underground road that would have competed with "Tube" lines
controlled by Yerkes. Morgan called Yerkes' coup "the greatest
rascality and conspiracy I ever heard of".[20]International
Mercantile MarineIn 1902, J.P. Morgan & Co. financed the
formation of International Mercantile Marine Company, an Atlantic
shipping combine which absorbed several major American and British
lines. IMM was a holding company that controlled subsidiary
corporations that had their own operating subsidiaries. Morgan
hoped to dominate transatlantic shipping through interlocking
directorates and contractual arrangements with the railroads, but
that proved impossible because of the unscheduled nature of sea
transport, American antitrust legislation, and an agreement with
the British government. One of IMM's subsidiaries was the White
Star Line, which owned the RMS Titanic. The ship's famous sinking
in 1912, the year before Morgan's death, was a financial disaster
for IMM, which was forced to apply for bankruptcy protection in
1915. Analysis of financial records shows that IMM was
overleveraged and suffered from inadequate cash flow that caused it
to default on bond interest payments. Saved by World War I, IMM
eventually reemerged as the United States Lines, which itself went
bankrupt in 1986.[21][22]
J. P. Morgan Quotes Go as far as you can see; when you get
there, you'll be able to see farther. (J. P. Morgan) A man always
has two reasons for doing anything: a good reason and the real
reason.(J. P. Morgan) When you expect things to happen - strangely
enough - they do happen. (J. P. Morgan ) No problem can be solved
until it is reduced to some simple form. The changing of a vague
difficulty into a specific, concrete form is a very essential
element in thinking.(J. P. Morgan) If you have to ask how much it
costs, you can't afford it. Well, I don't know as I want a lawyer
to tell me what I cannot do. I hire him to tell how to do what I
want to do.(J. P. Morgan)