Few company names are as iconic as JPMorgan Chase. The bank is one of America’s oldest financial institutions and traces its roots back to 1799 as The Bank of The Manhattan Co. Today, it is the country’s largest bank in terms of assets, with more than $2 trillion in assets and has operations in more than 50 countries and upward of 183,000 employees.
One thing that distinguishes JPMC from competitors is that it is an investment and a commercial bank. The scope of its services is wide – from investment banking, financial services for individuals and small businesses, commercial banking, financial transaction processing, asset management, private equity and more.
The road from 1799 to present has hardly been a straight line, with some 1,000 predecessors. Throughout, there have been no shortage of mega mergers and acquisitions, especially during the early 2000s when the bank made headlines with major deals. In 2000, J.P. Morgan & Co. Incorporated merged with The Chase Manhattan Corp., which was epic in joining New York financial giants J.P. Morgan, Chase, Chemical and Manufacturers Hanover into one mega bank under the J.P. Morgan Chase & Co. moniker. Four years later the merger with Bank One sent shivers down the spine of competitors with the formidable combo of the investing and commercial prowess of J.P. Morgan Chase and consumer banking heavy hitter Bank One.
Another biggie came in 2008 when it acquired The Bear Stearns Companies Inc. But perhaps the most talked about was the 2008 acquisition of Washington Mutual. WaMu was the biggest bank failure in U.S. history. It was seized by regulators, and a deal was made with J.P. Morgan Chase where it was sold the bulk of WaMu’s operations. That deal expanded Chase’s consumer branch network into Washington State, Florida and California and set the stage for JPMC to become America’s second-largest branch network with locations reaching 42% of the U.S. population. The bank paid $1.9 billion for the pleasure of WaMu’s deposits, assets and certain liabilities.
One point of pride of JPMC is its resilience during the financial crisis of 2008 and 2009. When troubled financial institutions were dropping like flies or dangerously limping along, the bank’s legendary CEO Jamie Dimon was looking like the big cat that swallowed the mouse. According to an account in USA Today last year, “In terms of JPMorgan's operating record, the global financial crisis of 2008 to 2009 was Jamie Dimon's finest hour. What he himself labeled the bank's ‘fortress balance sheet’ served it well, enabling it to sail through the crisis without so much as a single losing quarter. Nearly seven years after the stock market's crisis low, JPMorgan is the only universal bank earning a return in excess of its cost of capital.”
JPMC has been called one of the world’s best companies, named among the best places for multicultural women and healthy lifestyles. It’s been recognized for its workplace practices and policies for diversity and inclusion.
But JPMC has had its moments in the Hall of Shame. The London Whale scandal in 2012 was a major black mark. A U.K. trader in the bank’s Chief Investment Office lost $6 billion in a derivatives play. In a settlement reached with U.S. and U.K. regulators, JPMC agreed to pay about $920 million in fines. Dimon had quite a bit of egg on his face; his 2012 bonus was nixed, as was nearly his hide.
In 2013, the Consumer Financial Protection Bureau (CFPB) ordered Chase Bank USA, N.A. and JPMorgan Chase Bank, N.A. to refund an estimated $309 million to more than 2.1 million customers for illegal credit card practices. Chase was found to have engaged in unfair billing practices for certain credit card “add-on products” by charging consumers for credit monitoring services they did not receive.
Two years later, the CFPB and attorneys general in 47 states and the District of Columbia took action against the bank for selling bad credit card debt and illegally robo-signing court documents. The CFPB and states found that Chase sold “zombie debts” to third-party debt buyers, which included accounts that were inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectible. Chase was ordered to pay at least $50 million in consumer refunds, $136 million in penalties and payments to the CFPB and states, and a $30 million penalty to the Office of the Comptroller of the Currency in a related action.
Even with numerous scandals, JPMorgan Chase continues to be the largest bank in America. When folks like Warren Buffett have such high praise for CEO Dimon, calling for him to be Treasury Secretary a few years ago, expect the megabank to remain a dominant force in the U.S. financial sector for years to come.