|J.P.Morgan Chase & Co.|
|Type||Public (NYSE: JPM)|
|Headquarters||New York City, USA|
|Key people||James L. Dimon
(Chairman), (President) & (CEO)
|Industry||Finance and insurance|
|Revenue||US$ 116.353 billion (2007)|
|Operating income||US$ 46.133 billion (2007)|
|Net income||US$ 15.365 billion (2007)|
JPMorgan Chase & Co. (NYSE: JPM) is one of the oldest financial services firms in the world. It is a leader in the financial industry with assets of 2.3 trillion dollars, and the largest market capitalization and deposit base of any U.S. banking institution. The hedge fund unit of JPMorgan Chase is the largest hedge fund in the United States with 34 billion dollars in assets as of 2007. Formed in 2000 when Chase Manhattan Corporation acquired J.P. Morgan & Co., the firm serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and governmental clients. In 2004, the company merged with Bank One Corp., the fourth-largest bank in the U. S. and the world's largest issuer of Visa credit cards. JPMorgan Chase's corporate headquarters are in New York City, and its retail financial services and commercial banking headquarters are in Chicago.
JPMorgan Chase's major legacy institutions, J.P. Morgan, Chase Manhattan, Chemical Bank, Manufacturers Hanover, Bank One, First Chicago and National Bank of Detroit, have contributed significantly to global economic growth and to the development of numerous modern investment, banking and financial products. Several of them are among the oldest banking institutions in the United States. The Bank of the Manhattan Company was established in 1799 by Aaron Burr to help the Jeffersonians in the election of 1800; Chemical Bank was initially founded in 1824 as a maker of various chemicals; J.P. Morgan & Co. was founded in 1871 by J. Pierpont Morgan with Philadelphia banker Anthony J. Drexel to serve as an agent for European investors. JPMorgan Chase has been implicated in several corporate financial scandals, including the failures of Enron and Worldcom, for serving its own interests and the personal interests of its principals rather than the interests of investors. In 2008, JPMorgan Chase salvaged Bear Stearns (the fifth largest investment bank in the United States) and Washington Mutual Bank (the largest savings and loan in the United States) when they collapsed during the subprime mortgage meltdown and subsequent financial crisis.
The JPMorgan brand is used by the Investment Bank as well as the Asset Management, Private Banking, and Private Wealth Management 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 and the bank's retail banking activities in the United States.
JPMorgan Chase, as it exists in 2008, is the result of the combination of several large U.S. banking companies over the last decade including Chase Manhattan Bank, J.P. Morgan & Co., Bank One, Bear Stearns and Washington Mutual. Its predecessors include major banking firms among which are Chemical Bank, Manufacturers Hanover, First Chicago Bank, National Bank of Detroit and Texas Commerce Bank.
Chemical Banking Corporation
The 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"). 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 acquired the Chase Manhattan Corporation taking the more prominent Chase name and creating what was then the largest bank holding company in the United States. In 2000, the combined company acquired J.P. Morgan & Co. and combined the two names to form what is today JPMorgan Chase & Co.. JPMorgan Chase retains Chemical Bank's headquarters at 277 Park Avenue and stock price history.
Chase Manhattan Bank
The Chase Manhattan Bank was formed upon the 1955 purchase of Chase National Bank (established in 1877) by the Bank of the Manhattan Company, the company's oldest predecessor institution. The Bank of the Manhattan Company was established in 1799 by Aaron Burr. At that time, a bank charter could only by obtained through an act of the state legislature. Burr, who was very influential in New York City and the New York legislature, was asked by Jefferson and Madison to help the Jeffersonians in the election of 1800. Burr sponsored a bill through the New York Assembly that established a water utility company called the Manhattan Company, to provide clean water to New York City. By sneaking a clause into a charter that allowed the company to invest surplus capital in any lawful enterprise, he enabled the Democratic-Republicans to create a bank for Jefferson's campaign. 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.
Led by David Rockefeller during the 1970s and the 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 but retained the Chase name. Prior to its merger with J.P. Morgan & Co., Chase acquired San Francisco-based Hambrecht & Quist in 1999 for 1.35 billion dollars.
J.P. Morgan & Company
In 1854, Junius S. Morgan joined a London-based banking business headed by George Peabody. Over the next ten years, Junius took control of George Peabody & Co., changing the name to J.S. Morgan & Co. Junius's son, J. Pierpont Morgan, came to work with his father in 1857, and in 1871, founded Drexel, Morgan & Co. in New York with Philadelphia banker Anthony J. Drexel. The new merchant banking partnership served initially as an agent for Europeans investing in the United States.
The House of Morgan
In 1895, Drexel, Morgan & Co. became J.P. Morgan & Co. (see also: John Pierpont Morgan). It financed the formation of the United States Steel Corporation, which took over the business of Andrew Carnegie and others and became the world's first billion-dollar corporation. In 1895, it supplied the United States government with 62 million dollars in gold to float a bond issue and restore the treasury surplus of 100 million dollars. 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.
The bank’s headquarters, built in 1914, was known as "The Corner" and "The House of Morgan," and for decades, 23 Wall Street was the most important address in American finance. At noon on September 161920, an anarchist 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 which 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." After 20 years of investigation the FBI rendered the file inactive in 1940 without ever finding the perpetrators.
J. P. Morgan, Jr. (1867 – 1943), son of John Pierpont Morgan, played a major role in financing the Allies during World War I. In August 1914, Henry P. Davison, a Morgan partner, traveled to the UK and contracted with the Bank of England to make J.P. Morgan & Co. the monopoly underwriter of war bonds for UK and France. The Bank of England and J.P. Morgan & Co. became mutual "fiscal agents" of each other. Mr. Morgan organized a syndicate of about 2200 banks and floated a loan of 500,000,000 dollars to the Allies. J.P. Morgan & Co. also invested in the companies that supplied of war equipment to Britain and France, profiting from both the financing and purchasing activities of the two European governments.
Glass-Steagall and Morgan Stanley
Following the collapse of a large portion of the American commercial banking system in early 1933, the Glass-Steagall Act required J.P. Morgan & Co., along with all integrated banking businesses in the United States, to separate its investment banking from its commercial banking operations. J.P. Morgan & Co. chose to continue operating as a commercial bank, because in the post-depression era commercial lending was perceived to be more profitable and prestigious. Many within J.P. Morgan believed that the company could quickly resume its securities businesses if a change occurred in the political climate, but that it would be nearly impossible to reconstitute the bank if it were disassembled.
In 1935, after being barred from the securities business for over a year, the management of J.P. Morgan made the decision to spin 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 6.6 million dollars of nonvoting preferred stock from J.P. Morgan partners. In its infancy, Morgan Stanley was headquartered just down the street from J.P. Morgan at 2 Wall Street, and Morgan Stanley bankers routinely used 23 Wall Street for transaction closings.
Morgan Guaranty Trust
In the years following the spin-off of Morgan Stanley, the securities business grew exponentially while the parent firm, which incorporated in 1940, barely expanded. 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, with which it already had numerous relationships. J.P. Morgan brought a prestigious name and high quality clients and bankers to the merger, and Guaranty Trust brought significant amounts of capital. Although Guaranty Trust was nearly four times the size of J.P. Morgan at the time of the merger in 1959, the newly-formed Morgan Guaranty was managed primarily by legacy J.P. Morgan employees and J.P. Morgan was considered the buyer.
Return of J.P. Morgan & Co.
Although Morgan Guaranty established a bank holding company called J.P. Morgan & Co. Incorporated ten years after the merger, it continued to operate as Morgan Guaranty through the 1980s before returning to the use of the J.P. Morgan brand. In 1988, the company once again began operating exclusively as J.P. Morgan & Co.
During the 1980s, J.P. Morgan, along with other commercial banks, began to move toward investment banking by issuing commercial paper. In 1989, the Federal Reserve permitted J.P. Morgan to be the first commercial bank to underwrite a corporate debt offering In the 1990s, J.P. Morgan moved quickly to rebuild its investment banking operations and by the late 1990s it had emerged as one of the top five securities underwriters.
In 2000, J.P. Morgan & Co. merged with Chase Manhattan Corp., in effect combining four of the largest and oldest money center banking institutions in New York City (J.P. Morgan, Chase, Chemical and Manufacturers Hanover) into J.P. Morgan Chase & Co..
Bank One Corporation
Bank One Corporation began as 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 Bank One Corporation. With the beginning of interstate banking it spread into other states, always renaming acquired banks "Bank One," though for a long time it did not combine them into one bank. In 1998 Banc One of Ohio and First Chicago NBD merged to form Bank One Corporation. The new company suffered from poor organization and a confusion of technologies inherited from its many previous mergers with state banks. CIO John B. McCoy, whose father and grandfather had headed Banc One and its predecessors, was replaced by Jamie Dimon, a former key executive of Citigroup. Bank One subsequently merged with Louisiana's First Commerce Corp., to become the largest financial services firm in the Midwest, the fourth-largest bank in the U. S. and the world's largest issuer of Visa credit cards. JPMorgan Chase completed the acquisition of Bank One in 2004, 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 became CEO in January 2006 and Chairman in December 2006.
At the end of 2007, Bear Stearns 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, as rumors emerged that clients were withdrawing capital from the bank, Bear Stearns & Co. Inc. lost 47 percent of its market value to close at 30.00 dollars per share. Over the following weekend it emerged that Bear Stearns might prove insolvent and on or around March 15, 2008 the Federal Reserve intervened to prevent a wider systemic crisis from the potential collapse of Bear Stearns.
On March 16, 2008, JPMorgan Chase announced that would acquire Bear Stearns & Co. Inc. in a stock swap worth 2.00 dollars per share or 240 million dollars pending mutual shareholder approval scheduled within 90 days, and guaranteeing Bear Stearns trades and business process flows. Two days later, on March 18, 2008, JPMorgan Chase announced the acquisition of Bear Stearns for 236 million dollars. The stock swap agreement was completed in the late night hours of March 18, 2008, with JPMorgan exchanging 0.05473 of each of its shares for one Bear share, which was valued at 2 dollars. 
On March 24, 2008, a revised offer was announced at approximately 10 dollars per share. Under the revised terms, JPMorgan immediately acquired a 39.5 percent stake in Bear Stearns (using newly issued shares) at the new offer price and gained a commitment from the board (representing another 10 percent of the share capital) that its members would vote in favor of the new deal. The merger was completed by June 2, 2008 and Bear Stearns is currently part of JPMorgan Chase.
On September 25, 2008 Seattle-based Washington Mutual Inc.'s subsidiary bank, Washington Mutual Bank, the largest savings and loan in the United States, was closed by the Office of Thrift Supervision, and placed into the receivership of the Federal Deposit Insurance Corporation, in the largest failure by far of a U.S. bank. The FDIC sold the bank's assets, secured debt obligations and deposits to JPMorgan Chase & Co for 1.836 billion dollars. JPMorgan Chase re-opened the bank the following day. To cover writedowns and losses after taking on deposits and branches of Washington Mutual, JPMorgan Chase raised 10 billion dollars in a stock sale.  Through the acquisition, JPMorgan Chase acquired the former accounts of Providian National Bank, a credit card issuer WaMu acquired in 2005.
Other recent acquisitions
In 2006, JPMorgan Chase purchased Collegiate Funding Services, LLC, and created Chase Education Finance.
On April 7, 2006, JPMorgan Chase announced a swap of its corporate trust unit for The Bank of New York Co.'s retail and small business banking network. The swap valued The Bank of New York business at 3.1 billion dollars and JPMorgan's trust unit at 2.8 billion dollars and gave Chase access to 338 additional branches and 700,000 new customers in New York, New Jersey, and Indiana.
On March 26, 2008, JPMorgan's Environmental Markets group acquired the UK-based carbon offsetting company.
The following is an illustration of the company's major mergers and acquisitions and historical predecessors (this is not a comprehensive list):
Banking subsidiaries and financial data
JPMorgan Chase & Co. owns five bank subsidiaries in the United States:
- Chase Bank USA, National Association
- JPMorgan Chase Bank, National Association
- JPMorgan Chase Bank, Dearborn
- J.P. Morgan Trust Company, National Association
- Custodial Trust Company
Although Chase Manhattan Bank's headquarters were once located at the One Chase Manhattan Plaza building in downtown Manhattan, the world headquarters for JPMorgan Chase & Co., as of December 2008, are located at 270 Park Avenue. The bank moved some of its operations to the JPMorgan Chase Tower (formerly Texas Commerce Bank Tower) in Houston, Texas, when it purchased Texas Commerce Bank. Since merging with Bank One in 2004, retail services (branded as "Chase") are headquartered in Chicago. The Card Services division has its headquarters in Wilmington, DE, with Card Services offices in Elgin, IL, Mumbai, India, San Antonio, TX, Springfield, MO, and Frederick, MD. There are also large operations centers in Brooklyn, NY, Rochester, NY, Columbus, OH, Dallas, TX, Fort Worth, TX, Indianapolis, IN, Tampa, FL, Orlando, FL, Louisville, KY, Newark, DE, Phoenix, AZ, Milwaukee, WI, Toronto, ON Canada,Burlington, Ontario Canada. Glasgow, London, Liverpool, Bournemouth and Swindon in the United Kingdom. There are also backoffice and technology operations offices based in Manila in the Philippines, and Mumbai and Bangalore, India.
The JPMorgan Investment Bank also maintained a number of high-profile offices around the globe, with the largest concentrations outside the US in London, Tokyo, Hong Kong and Singapore. In August 2008, the bank announced plans to construct a new European headquarters, based at Canary Wharf, London.
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.
In 2002, WorldCom telecommunications collapsed after an 11 billion dollars fraud was perpetrated by its executive officers. J. P. Morgan Chase, which helped underwrite 15.4 billion dollars of WorldCom's bonds, agreed in the middle of March 2005 to pay 2 billion dollars to investors who claimed that JPMorgan failed to carry out appropriate checks on Worldcom’s financial circumstances before underwriting stock and bond issues. That amount was 46 percent, or 630 million dollars, more than it would have paid had it accepted an earlier investor offer in May of 1.37 billion dollars. J. P. Morgan was the last big lender to settle. Its payment was the second largest in the case, exceeded only by the 2.6 billion dollars accord reached in 2004 by Citigroup.
In April 2002, the University of California, lead plaintiff in the Enron shareholders lawsuit, filed a complaint in the U. S. District Court alleging that nine financial institutions including JPMorgan collaborated with Enron executives to deceive investors by moving billions of dollars of debt off its balance sheet and artificially inflating the value of Enron stock. The banks helped to set up clandestinely controlled Enron partnerships, used offshore companies to disguise loans, and facilitated the phony sale of overvalued Enron assets; simultaneously, their securities analysts were making false, optimistic assessments of Enron to entice investors into poor investment decisions. These activities cost Enron employees and investors in pension funds, such as the University of California, more than 25 billion dollars. When Enron's financial manipulations finally became public and the stock collapsed in November 2001, executives from J.P. Morgan Chase and Citigroup pressured Moody's to keep Enron's credit rating in place until the banks could arrange a bailout sale of Enron to avoid insolvency and forestall a full-scale investigation into the company's dealings.
Government subsidies and incentives
In June, 2007, BBC News reported that the City of New York and the State of New York had offered JPMorgan Chase tax breaks, discounted electric power and rent subsidies worth 750 million dollars to build its NEW headquarters in downtown New York instead of relocating to Connecticut. While there are other companies had received similar incentives to stay in New York's Downtown after the 9/11 World Trade Center disaster, this was the largest offer of its kind to date. Following the acquisition of Bear Stearns, JPMorgan Chase abandoned its relocation plans.
- Chase Field, Phoenix, Arizona, - Arizona Diamondbacks, MLB.
- Major League Soccer
- Chase Auditorium (formerly Bank One Auditorium) in Chicago is the home of the nationally syndicated NPR program, "Wait Wait... Don't Tell Me!"
- The JPMorgan Chase Corporate Challenge, owned and operated by JPMorgan Chase, is the largest corporate road racing series in the world with over 200,000 participants in 12 cities in six countries on five continents. It has been held annually since 1977 and the races range in size from 4,000 entrants to more than 60,000.
- JPMorgan Chase is said to be finalizing a deal to be the principal sponsor for a New York Yacht Club-backed America's Cup challenge.
- JPMorgan Chase is the official sponsor of the US Open golf tournament.
- ↑ 1.0 1.1 1.2 1.3 JPMorganChase & Co. AnnualReport 2007 Retrieved December 13, 2008.
- ↑ John Steele Gordon. An empire of wealth: the epic history of American economic power. (New York: HarperCollins. 2004. ISBN 9780060093624), 114
- ↑ Drexel's father, Francis Martin Drexel, founded Drexel & Company which was a predecessor of Drexel Burnham Lambert, which collapsed in 1990.
- ↑ New York Bank History Scripophily.com. Retrieved December 12, 2008.
- ↑ On July 13, 1989 J.P. Morgan & Co. underwrote an offering of 9.20 percent notes for Xerox Corporation, the first corporate debt offering underwritten by a commercial bank in the United States since 1933.
- ↑ JPMorgan Chase History Retrieved December 13, 2008.
- ↑ History of JPMorgan ChaseRetrieved December 13, 2008.
- ↑ Francesco Guerrera, Bear races to forge deal with JPMorgan FT.com Financial Times (March 16, 2008) Retrieved December 12, 2008.
- ↑ James Quinn, JP Morgan Chase bags bargain Bear Stearns Telegraph.co.uk, March 19, 2008. Retrieved December 12, 2008.
- ↑ David Ellis, "JPMorgan buys WaMu", CNNMoney.com, September 25, 2008. Retrieved December 12, 2008.
- ↑ Elizabeth Hester, JPMorgan Raises 10 Billion dollars in Stock Sale After WaMu, Bloomberg.com, September 6, 2008. Retrieved December 12, 2008.
- ↑ ClimateCare Retrieved December 12, 2008.
- ↑ Other Successors to the break-up of The House of Morgan: Morgan Stanley and Morgan, Grenfell & Co.
- ↑ Predecessors to J.P. Morgan & Company include Drexel, Morgan & Co., Dabney, Morgan & Co. and J. S. Morgan & Co.
- ↑ On March 18, 2008, JPMorgan Chase announced the acquisition of Bear Stearns for 236 million dollars. On March 24, 2008, a revised offer was announced at approximately 10 dollars per share
- ↑ On September 25, 2008, JPMorgan Chase announced the acquisition of Washington Mutual for 1.8 Billion dollars.
- ↑ Organization Hierarchy of JPMORGAN CHASE & CO. . Federal Reserve System. accessdate 2008-09-22
- ↑ 18.0 18.1 18.2 OpesC Retrieved December 13, 2008.
- ↑ Peter Woodifield, JPMorgan to Move European Head Office to Canary Wharf, Bloomberg, August 1, 2008. Retrieved December 13, 2008.
- ↑ JPMorgan to pay 2 billion dollars to end WorldCom suit Banking Business Review Online (March 17, 2005) Retrieved December 12, 2008.
- ↑ Former WorldCom Chairman to Pay $5.5 Million Settlement Bloomberg News, March 22, 2005. Retrieved December 12, 2008.
- ↑ Press release, Update on UC's Enron Investments and Lawsuit. Banks, law firms were pivotal in executing Enron securities fraud. The University of California Office of the President (April 4, 2002) Retrieved December 12, 2008.
- ↑ Bank subsidy for Ground Zero move BBC News (June 14, 2007) Retrieved December 12, 2008.
- Brandeis, Louis Dembitz, and Melvin I. Urofsky. 1995. Other people's money and how the bankers use it. The Bedford series in history and culture. Boston: Bedford Books of St. Martin's Press. 1995. ISBN 031210314X
- Byman, Jeremy. J. P. Morgan: banker to a growing nation. Greensboro, NC: Morgan Reynolds Incorp. 2001. ISBN 1883846609
- Carosso, Vincent P. The Morgans: Private International Bankers, 1854-1913. Harvard Univ. Press. 1987. ISBN 978-0674587298
- Carosso, Vincent P. Investment banking in America, a history. (Harvard studies in business history, 25.) Cambridge, MA: Harvard University Press. 1970. ISBN 9780674465749
- Chernow, Ron. The house of Morgan: an American banking dynasty and the rise of modern finance. New York: Atlantic Monthly Press, 2001. ISBN 0802138292
- Fraser, Steve. Every man a speculator: a history of Wall Street in American life. New York, NY: HarperCollins. 2005. ISBN 9780066620480
- Geisst, Charles R. Wall Street: a history: from its beginnings to the fall of Enron. Oxford: Oxford University Press. 2004. ISBN 9780195170610 online edition questia.com. Retrieved December 12, 2008.
- Gordon, John Steele. 2004. An empire of wealth: the epic history of American economic power. New York: HarperCollins. 2004. ISBN 9780060093624
- Moody, John. The Masters of Capital: A Chronicle of Wall Street. Yale University Press. 1921. online edition Retrieved December 12, 2008.
- Morris, Charles R. 2005. The tycoons: how Andrew Carnegie, John D. Rockefeller, Jay Gould, and J.P. Morgan invented the American supereconomy. New York: H. Holt and Co. 2005. ISBN 978-0805081343
- Strouse, Jean. Morgan: American Financier. Random House, 1999. ISBN 978-0679462750
All links retrieved December 12, 2008.
- JPMorgan Chase & Co. website
- California Attorney General's announcement of 2006 settlement with Chase regarding Trilegiant/Affinion marketing fraud, and Text of Settlement Judgement
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