JPMorgan Chase

• 1. Introduction

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  JPMorgan Chase traces its roots to a political maneuver so brazen it would be called corruption today. In 1799, Aaron Burr wanted to found a bank in New York City. The problem: obtaining a bank charter required an act of the state legislature, and Burr's political enemies held the levers of power. His solution was to bury a single clause inside a charter for a company called The Manhattan Company, nominally organized to supply clean water to New York City. That innocuous-looking clause allowed the company to invest its surplus capital in any lawful enterprise. Within six months, and before it had laid a single section of water pipe, the company opened a bank. That bank is today JPMorgan Chase, the largest bank in the United States and, as of 2026, the world's largest by market capitalization.

  How a water company became a global financial institution is a story of political cunning, crisis-driven acquisitions, and repeated confrontations with the law. Who were the architects that shaped this institution across two centuries? What crises propelled its growth? And why does a bank this large carry the nickname "Fortress Balance Sheet"?

• 2. House of Morgan

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  23 Wall Street was built in 1914, and for decades it served as the address from which J.P. Morgan & Co. shaped the financial architecture of a young industrial nation. The firm itself had grown out of a partnership called Drexel, Morgan & Co., which was renamed J.P. Morgan & Co. in 1895. That same year, the company supplied the United States government with $62 million in gold to float a bond issue and restore the treasury surplus to $100 million. The episode illustrated what the firm had become: a private institution capable of rescuing a sovereign.

  J.P. Morgan & Co. financed the formation of United States Steel Corporation, the world's first billion-dollar corporation, absorbing the business of Andrew Carnegie and others in the process. Starting in 1892, the firm began financing the New York, New Haven and Hartford Railroad, steering it through a series of acquisitions that made it the dominant rail carrier in New England.

  In August 1914, Morgan partner Henry P. Davison struck a deal with the Bank of England to make J.P. Morgan & Co. the exclusive underwriter of war bonds for both the United Kingdom and France. The Bank of England became a fiscal agent of the firm, and vice versa. The company invested in weapons suppliers to both governments and profited from their financing needs throughout the war. In the 1920s, as the U.S. federal government pulled back from international affairs under successive isolationist administrations, J.P. Morgan & Co. continued playing a central role in global finance, since most European countries still owed significant war debts.

  On the 16th of September 1920, a terrorist bomb exploded in front of 23 Wall Street, killing 38 people and injuring 400. A warning note had been placed in a nearby mailbox at Cedar Street and Broadway shortly before the explosion. The FBI rendered the case inactive in 1940, and it has never been solved.

  The Glass-Steagall Act of the 1930s forced integrated American banks to separate investment banking from commercial banking. J.P. Morgan & Co. chose to operate as a commercial bank. In 1935, after more than a year barred from the securities business, firm leaders spun off the investment-banking operations. Morgan Stanley was founded on the 16th of September 1935, with $6.6 million in nonvoting preferred stock from J.P. Morgan partners. Its co-founders were Henry S. Morgan, son of Jack Morgan and grandson of J. Pierpont Morgan, and Harold Stanley.

• 3. Chemical Bank's Rise

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  The New York Chemical Manufacturing Company was founded in 1823 as a maker of chemicals. The following year, it amended its charter to add banking, creating the Chemical Bank of New York. After 1851, the bank separated from its industrial parent and grew by acquisition, adding Corn Exchange Bank in 1954, Texas Commerce Bank in 1986, and Manufacturers Hanover Trust Company in 1991 in what was described at the time as the first major bank merger "among equals."

  In 1984, Chemical launched Chemical Venture Partners to invest in private equity transactions alongside financial sponsors. Through the late 1980s and early 1990s, the bank became one of the leading arrangers of leveraged buyout financing in the United States, building a syndicated leveraged finance business under investment banker Jimmy Lee.

  In 1996, Chemical Bank acquired Chase Manhattan, whose earlier prestige under David Rockefeller in the 1970s and 1980s had faded after the real estate collapse of the early 1990s. The transaction was unusual: Chemical was the nominal survivor, but it took the better-known Chase name. JPMorgan Chase retains Chemical's pre-1996 stock price history to this day, as well as Chemical's former headquarters site at 270 Park Avenue. Two years before the merger with J.P. Morgan, the newly named Chase made further investments in asset management: it acquired San Francisco-based Hambrecht & Quist for $1.35 billion in 1999 and UK-based Robert Fleming & Co. for $7.7 billion in April 2000.

• 4. Jamie Dimon and Bank One

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  Bank One Corporation arrived at its 2004 merger with JPMorgan Chase carrying a turbulent history. The Columbus, Ohio-based Banc One had merged with First Chicago NBD in 1998, a combination initially regarded as a failure. The departure of CEO John B. McCoy followed adverse financial results; McCoy's father and grandfather had both previously headed the bank and its predecessors. The firm needed a turnaround before it could be a credible merger partner.

  Jamie Dimon provided that turnaround. He introduced new cost-cutting strategies, replaced existing executives with people who had worked with him at Citigroup, and rebuilt Bank One into a viable institution. When the merger with JPMorgan Chase was completed in the third quarter of 2004, Dimon joined as president and chief operating officer. He became CEO in December 2005 and chairman in December 2006, succeeding William B. Harrison Jr.

  Dimon's management philosophy included what the bank came to call the "Fortress Balance Sheet," a doctrine of maintaining strong capital reserves as protection against market disruption. That doctrine would be tested almost immediately. In November 2009, a week after Birmingham, Alabama Mayor Larry Langford was convicted for crimes related to bond swaps, JPMorgan Chase settled with the Securities and Exchange Commission for $722 million over alleged undisclosed payments made to secure a contract to refinance Jefferson County's sewer debt.

• 5. Crisis Acquisitions

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  On the 14th of March 2008, Bear Stearns lost 47 percent of its equity market value in a single day as rumors spread that clients were withdrawing capital. Bear Stearns had been the fifth-largest investment bank in the United States at the end of 2007. The following weekend, the Federal Reserve engineered an emergency deal to prevent the bank's collapse from triggering a wider systemic crisis. On the 16th of March, JPMorgan Chase announced plans to acquire Bear Stearns in a stock swap initially valued at $2.00 per share, or roughly $240 million. After public discontent over the low price threatened the deal's closure, a revised offer of approximately $10 per share was announced on the 24th of March. JPMorgan also immediately acquired a 39.5% stake in Bear Stearns using newly issued shares at the revised price. The merger was completed on the 30th of May 2008.

  The following September brought an even larger test. On the 25th of September 2008, the Office of Thrift Supervision seized Washington Mutual Bank in what was by far the largest bank failure in American history and placed it into receivership. That night, the FDIC sold Washington Mutual's assets, secured debt obligations, and deposits to JPMorgan Chase for $1.836 billion. Washington Mutual shareholders lost all their equity. JPMorgan raised $10 billion in a stock sale to cover expected writedowns and losses.

  On the 1st of May 2023, JPMorgan acquired the substantial majority of assets and inherited the deposits of First Republic Bank in what was the second-largest bank failure in American history, behind the Washington Mutual takeover fifteen years earlier. Under the terms, JPMorgan agreed to make a $10.6 billion payment to the FDIC. The FDIC estimated the cost to its Deposit Insurance Fund at approximately $13 billion. First Republic Bank shareholders lost all their equity.

  JPMorgan's CEO Jamie Dimon later acknowledged that not all acquisitions were as strategically sound. He called the $175 million purchase of the college financial aid startup Frank a "huge mistake." In March 2025, Charlie Javice, Frank's founder, was convicted on all counts of fraud. Prosecutors showed that Frank had claimed 4.25 million users when it had approximately 300,000. JPMorgan had discovered the fraud when it attempted to contact Frank's customers and received far fewer responses than expected.

• 6. Legal Reckoning

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  The scale of JPMorgan Chase's legal liabilities across three decades is difficult to absorb as a single number. Chase paid over $2 billion in fines and legal settlements for its role in financing Enron, whose financial scandal collapsed in 2001, followed by a further $2.2 billion to settle an investor lawsuit in 2005. In March 2005, JPMorgan agreed to pay $2 billion to settle investor claims related to WorldCom's bond underwriting, a sum 46 percent higher than an earlier settlement offer it had declined.

  Also in 2005, JPMorgan Chase acknowledged that two predecessor banks had received thousands of slaves as collateral before the Civil War. The company apologized for its role in the institution of slavery and paid $5 million in reparations in the form of a scholarship program for Black students.

  In November 2013, JPMorgan agreed to a $13 billion settlement with the Justice Department over mortgage-backed securities sold in the period from 2005 to 2007. Of that total, $9 billion was penalties and fines and $4 billion was consumer relief. Dimon described the settlement as "unfair" and said he had to "control his rage," noting that an estimated 70-80% of the liability stemmed from Bear Stearns and Washington Mutual dealings, not JPMorgan's own.

  Bernie Madoff had opened a business account at Chemical Bank in 1986 and maintained it after Chemical acquired Chase. On the 7th of January 2014, JPMorgan agreed to pay $2.05 billion to settle civil and criminal charges related to its role in the Madoff scandal, including a $1.7 billion forfeiture. The government had charged the bank with Bank Secrecy Act violations for failing to report concerns about Madoff, concerns that its own investment bankers had shared with UK authorities in October 2008 while the bank's retail division continued Madoff's accounts without restriction until his arrest two months later.

  In November 2016, JPMorgan agreed to pay $264 million to settle charges that it had operated a systematic hiring scheme from 2006 to 2013, securing business in Hong Kong by employing hundreds of friends and relatives of Chinese government officials, generating more than $100 million in revenue for the bank in the process. In September 2020, the company admitted it had manipulated precious metals futures and government bond markets over an eight-year span and settled with the Justice Department, the SEC, and the Commodity Futures Trading Commission for $920 million.

  In June 2023, JPMorgan agreed to pay $290 million to settle a class-action lawsuit alleging the bank had benefited from and ignored evidence of Jeffrey Epstein's sex trafficking operations. A separate $75 million settlement followed in September 2023 with the United States Virgin Islands Department of Justice. The bank had maintained its relationship with Epstein even after his 2011 conviction, and in 2003 had earned $8 million in fees from him.

• 7. Innovation and Controversy

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  Blythe Masters led the derivatives team at JPMorgan that pioneered the credit default swap. The first such instrument was created to let Exxon borrow from JPMorgan while the bank transferred its risk to the European Bank of Reconstruction and Development. The team later developed the BISTRO, a bundle of credit default swaps that became the forerunner of the Synthetic CDO. As of 2013, JPMorgan held the largest credit default swap and credit derivatives portfolio by total notional amount of any American bank.

  In April 2012, traders and hedge fund insiders became aware that the market in credit default swaps was being influenced by the positions of Bruno Iksil, a JPMorgan trader who had taken positions so large he was referred to in the press as "the London whale." The bank initially denied and minimized the reports. In May 2012, JPMorgan disclosed losses of $2 billion. By July, that figure had been revised to $4.4 billion. The final realized loss was $6 billion. CEO Jamie Dimon described the trading strategy as "flawed, complex, poorly reviewed, poorly executed, and poorly monitored." On the 18th of September 2013, the bank agreed to pay a total of $920 million in fines to American and UK regulators, and publicly admitted breaking American securities law.

  In February 2019, JPMorgan announced JPM Coin, a digital token intended to settle transactions between wholesale payments clients. It would be the first cryptocurrency issued by a United States bank. In October 2016, the bank had already unveiled Quorum, a permissioned blockchain built on Ethereum's Go programming language. On the 19th of April 2021, JPMorgan pledged $5 billion toward the European Super League, a breakaway football competition that would have guaranteed its founding clubs entry in perpetuity without threat of relegation. After widespread backlash from supporters, clubs, governments, and football federations, the proposal collapsed. JPMorgan apologized for its role. Dimon said the company "kind of missed" that football supporters would respond negatively.

  JPMorgan had previously advised the Glazer ownership of Manchester United in 2003, helped Inter Milan and A.S. Roma sell bonds backed by future media revenue, and assisted Real Madrid in raising funds to refurbish its Santiago Bernabeu Stadium. Despite the Super League's failure, the bank entered the UK retail banking market in September 2021 under the Chase brand, marking its first retail banking operation outside the United States.

• 8. Climate and Capital

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  From 2016 through the first half of 2019, JPMorgan provided $75 billion to companies expanding in sectors including fracking and Arctic oil and gas exploration. According to the Rainforest Action Network, the bank's total fossil fuel financing was $62 billion in 2016, $69 billion in 2017, and $64 billion in 2018. From 2015 through 2021, JPMorgan provided $317 billion in fossil fuel financing, 33% more than any other bank.

  In January 2020, an internal JPMorgan study by bank economists David Mackie and Jessica Murray was leaked. The report, dated the 14th of January 2020, concluded that under the current trajectory of climate change "we cannot rule out catastrophic outcomes where human life as we know it is threatened." JPMorgan subsequently distanced itself from the study's content.

  On the 21st of October 2021, JPMorgan joined the Net-Zero Banking Alliance, which supports the global transition to a net-zero economy. In March 2016, the bank had already decided not to finance coal mines and coal power plants in wealthy countries. In May 2023, JPMorgan announced it would purchase $200 million in carbon credits representing 800,000 metric tons of carbon dioxide removal from multiple companies, after joining the Frontier CDR initiative backed by Alphabet, McKinsey, Meta Platforms, Shopify, and Stripe under a $925 million advance market commitment. The bank's new headquarters at 270 Park Avenue in Midtown Manhattan, which opened in October 2025 at a reported cost of $3 billion, is a 70-story, 1,388-foot tower with 2.5 million square feet of space designed to accommodate approximately 15,000 employees.