JPMorgan Chase

• Date Founded: 1799
• Industry: Banking and Financial Services
• Corporate Headquarters: New York, New York
• Type: Public

Overview

JPMorgan Chase & Co., headquartered in New York, is a large global financial services firm providing banking and investment services to customers worldwide. The company was created over more than two centuries, beginning in 1799, by consolidating more than one thousand different companies, including Chase Manhattan Bank, J. P. Morgan & Co., Bank One, Chemical Bank, and Manufacturers Hanover Trust Company.

In 2024, Forbes ranked JPMorgan first on its annual Global 2000 list of the world’s largest publicly traded companies. By 2024, the company had assets of approximately $4 trillion, which earned $253 billion in revenue, and $50 billion in profit. The company had operations in more than 100 countries, and 300,000 employees globally. At the end of 2024, it was the largest bank in the United States by assets.

JPMorgan Chase is considered to be among the strongest and best-managed financial institutions in the world. Despite several large legal settlements in the 2000s and 2010s and other controversies, the bank has retained its financial strength and is widely respected in the business community. Jamie Dimon became Chief Executive Officer (CEO) of the company in early 2006. He was praised for navigating the bank through the difficult years of the global financial crisis of 2007–10 and the aftermath of that crisis, and the succeeding recession that began in early 2020 following the onset of the global COVID-19 pandemic.

History

JPMorgan Chase traces its oldest roots to the Bank of the Manhattan, which was founded in 1799 in New York City by Aaron Burr, a US Senator who later became Vice President of the United States. Burr’s bank was funded by the Manhattan Co., which had been formed by Burr, Alexander Hamilton, and others to supply fresh water to the residents of Manhattan. Among other projects, the Bank of the Manhattan Co. financed the construction of the Erie Canal.

J. P. Morgan & Co. and the Chase Manhattan Bank, the two companies that combined in 2000 to form JPMorgan Chase, have storied pasts. The Chase National Bank was founded in 1877 by John Thompson, a banker. He named the bank in honor of his deceased friend Salmon P. Chase, who had been Abraham Lincoln’s treasury secretary. By 1930 it was the largest bank in the world. Chase National Bank merged with the Rockefeller family–controlled Equitable Trust Co. of New York in 1930, giving Chase a strong connection to the Rockefellers. It merged with the Bank of the Manhattan Co. in 1955 to form the Chase Manhattan Bank.

J. P. Morgan & Co. was founded in 1871 by financier J. Pierpont Morgan and banker Anthony Drexel and was originally called Drexel, Morgan & Co. The firm was instrumental in financing the development of the railroad industry in the late 1800s and large industrial mergers in the 1890s. In 1904, J. P. Morgan & Co. helped finance the construction of the Panama Canal.

Banking was primarily a local business until the 1970s, with only fourteen states permitting branches to be opened statewide. This changed in the late 1970s and 1980s, and large bank holding companies were formed. Multistate and national banking followed in the 1990s, resulting in a wave of mergers and consolidation of the banking industry.

A series of bank mergers in the 1990s and 2000s led to what ultimately became JPMorgan Chase & Co. Chemical Bank merged with Chase Manhattan Bank in 1996, creating the new Chase Manhattan, then the largest bank holding company in the United States. Chase Manhattan merged with J. P. Morgan & Co. in 2000, forming JPMorgan Chase.

Bank One combined with JPMorgan Chase in 2004, retaining the latter name. Bank One itself was formed by the merger of several Midwestern financial institutions, some dating back to the early 1800s. Jamie Dimon, then CEO of Bank One, became CEO of JPMorgan Chase at the beginning of 2006.

In March 2005, the bank reached a settlement with New York State regulators in which it agreed to pay $2 billion for selling bonds of the failed telecommunications company WorldCom to investors without adequately investigating WorldCom’s financial strength. Sixteen other banks also settled similar lawsuits, paying over $4 billion in aggregate.

The bank’s acquisition of investment bank Bear Stearns in March 2008 stunned Wall Street, in part because of the bargain-basement price paid by JPMorgan Chase. Amid the financial crisis that had started in 2007 during the subprime mortgage crisis, Bear Stearns was more troubled than previously thought and was on the verge of bankruptcy. JPMorgan agreed to the deal on the condition of financing of about $30 billion by the US Federal Reserve for Bear Stearns’s troubled assets.

In September 2008, JPMorgan bought the failed Washington Mutual Bank after federal regulators had seized it. It was the largest bank failure in United States history. JPMorgan agreed to pay $1.9 billion to the government.

By the 2010s, JPMorgan Chase had emerged from the early years of the Great Recession with a reputation for being one of the strongest financial institutions in the world. CEO Jamie Dimon was praised for successfully navigating the bank through the worst economic recession since the Great Depression. But the bank’s reputation suffered over the next few years as previously undisclosed problems were revealed. In May 2012, JPMorgan Chase disclosed huge trading losses at its London office, losses that were ultimately calculated to be as high as $6.2 billion. Bruno Iksil, the so-called "London Whale" trader at the bank, had made risky bets that had backfired. The bank ultimately paid fines and penalties of $920 million to US and UK regulators. On the same day, the bank also announced a settlement of $389 million for unfairly charging customers for credit-monitoring products.

The bank reached a $13 billion civil settlement in late 2013 with the US Justice Department for its mortgage-lending practices. Although it was directly responsible for some of these lending practices, much of JPMorgan Chase’s problems were a result of the acquisitions of Bear Stearns and Washington Mutual it made in 2008. In early 2014, JPMorgan Chase paid $1.7 billion to settle felony charges relating to the $65 billion Bernie Madoff Ponzi scheme. Yet, despite these massive settlements and losses, JPMorgan remained consistently among the more profitable banks in the country.

In September 2014, JPMorgan Chase disclosed that hackers, believed to be Russian, had breached the data of eighty-three million customers. This was one of the largest intrusions into the private customer data of any US business at the time.

Other controversies continued to plague the company into the late 2010s and early 2020s; in 2018, the company paid $5.3 million to the US government to settle accusations of violating weapons sanctions against Iran and Cuba. In 2020, the company also confessed to manipulating bond and precious metal markets over the previous eight years and settled with the US government for $920 million. 2020 also saw the company navigate the recession brought on by the global spread of the COVID-19 pandemic in early 2020.

Around this time, JPMorgan Chase also began exploring new technologies. In 2019, the company launched JPM Coin, becoming the first US bank to debut its own cryptocurrency. In May 2022, the company also began using blockchain, a cryptography-based digital record keeping system that allows cryptocurrency to function in its trading and lending processes. In 2024, JPMorgan rebranded JPM Coin as Kinexys Digital Payments and revealed plans to implement on-chain foreign exchange conversions on the platform.

In May 2023, JPMorgan Chase took over First Republic Bank after it was seized by federal regulators that same year. JPMorgan Chase received all of the beleaguered bank's deposits and most of its assets, outbidding other financial institutions.

Impact

Cobbled together by combining well over one thousand companies over two centuries, JPMorgan Chase & Co. is one of the most storied banks in the world. The bank played an important role in the US financial system and in financing the industrialization of the country. Predecessor banks of the modern JPMorgan Chase financed significant projects in the building of the nation, including the Erie Canal, the railroad industry, the Brooklyn Bridge, the Houston Ship Channel, and the Panama Canal.

However, the company has also faced criticism for its involvement in a number of major financial scandals of the twenty-first century, such as the collapse of energy company Enron in 2001 amid a massive securities fraud scandal and Bernie Madoff's decades-long Ponzi scheme. The bank also drew heavy criticism for its involvement in predatory lending practices leading up to the 2007–8 subprime mortgage crisis and subsequent Great Recession.

By the late 2010s, JPMorgan Chase began to draw negative attention for the large pay disparities between its top executives and rank-and-file workers. For example, in 2018, according to the Securities and Exchange Commission (SEC), CEO Jamie Dimon earned over $30 million in compensation that year, while median employee pay was $78,923, a pay ratio of roughly 381 to 1.

To help counter this negative publicity, the bank attempted to be a good corporate citizen in the communities where it operates. In 2016, JPMorgan Chase and its foundation donated nearly $250 million to nonprofit organizations around the world. In 2023, it announced plans to increase its annual giving to $1.75 billion. It has also pledged to invest in affordable housing initiatives and economic development and in initiatives to help low-skilled workers become better prepared for the workforce.

Bibliography

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