Chase (bank)

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JPMorgan Chase Bank, N.A.
Type Subsidiary of JPMorgan Chase
Industry Banking
Founded September 1, 1799, as Bank of the Manhattan Company
Headquarters Chase Tower, Chicago, Illinois
Key people William C. Weldon
(Chairman)[1]
Products Financial services
Revenue $99.99 billion (2012)
Net income $20.53 billion (2012)
Employees 260,965 (2012)
Parent JPMorgan Chase
Divisions Retail Financial Services, Card Services, Commercial Banking
Website Chase.com
Chase branches in the U.S. in 2010

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 US$2.515 trillion.

JPMorgan Chase, through its Chase subsidiary, is one of the Big Four banks of the United States.[5][6]

History[edit]

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 Company[edit]

Chase 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.

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 Bank[edit]

Chase 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 Certificate

However, 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[edit]

The September 1, 1799-1877 logo
The 1877-1954 logo
The 1954–1960 logo
The 1960–1976 logo

In 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[edit]

The 1976–2005 logo

In 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 City

The following is an illustration of the company's major mergers and acquisitions and historical predecessors to 1995 (this is not a comprehensive list):

Chase Manhattan Bank
(merged 1995)
Chemical Bank
(merged 1991)
Chemical Bank
(merged 1986)

The Chemical Bank
of New York

(est. 1823)



Texas Commerce Bank
(est. 1866)



Manufacturers Hanover
(merged 1961)

Manufacturers
Trust Company

(est. 1905)



Hanover Bank
(est. 1873)




Chase Manhattan Bank
(merged 1955)

Bank of the
Manhattan Company

(est. 1799)



Chase National Bank
of the City of New York

(est. 1877)




Bank One Corporation[edit]

Main article: Bank One Corporation

In 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 executives—many 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):

Bank One
(merged 1998)
Banc One Corp
(merged 1968)

City National Bank
& Trust Company (Columbus, Ohio)



Farmers Saving
& Trust Company



First Chicago NBD
(merged 1995)

First Chicago Corp
(est. 1863)



NBD Bancorp
(Formerly National Bank of Detroit)
(est. 1933)



 

Louisiana’s First
Commerce Corp.



Washington Mutual[edit]

Main article: Washington Mutual

On 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 acquisitions[edit]

In 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.

Controversies[edit]

Purchase of Nazi Germany's Reichsmarks During WWII[edit]

A 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 Rückwanderer [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 emigrés 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 Bank’s 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 WWII[edit]

Besides the controversial Rückwanderer 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. 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 France[edit]

US 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 Controversies[edit]

JPMorgan 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 America’s 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. Treasury’s 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:[25][26][27][28][29][30]

Targeted account closures[edit]

Over 2013 and 2014, Chase (along with other banks including City National) gained media attention through the practice of canceling the personal and business accounts of hundreds of legal sex workers citing in some instances the "morality clause" of their account agreement.[31][32] Later it was discovered that this practice included mortgage accounts and business loans.[33] Chase canceled the mortgage refinancing process for one individual, that the bank had initiated, whose production company made soft core films like those broadcast on Cinemax.[34] This resulted in a lawsuit[35] which cited evasive dealings and misleading statements by several Chase executives including Securities Vice President Adam Gelcich, Legal Fair Lending department Vice President Deb Vincent, and an unnamed executive director and assistant general counsel.[36]

In addition to closing accounts for sex workers, the bank has also been using its "morality clause" to disassociate from other types of businesses.[37] Some of these other businesses include medical marijuana dispensaries and any that are "gun related".[37] Another was a woman-owned condom manufacturing company called Lovability Condoms. Company founder Tiffany Gaines was rejected by Chase Paymentech services "as processing sales for adult-oriented products is a prohibited vertical" and was told that it was a "reputational risk" to process payment for condoms.[37] Gaines then started a petition to ask Chase to review and change its policy of classifying condoms as an "adult oriented product."[38] The bank later reversed its decision and invited Gaines to submit an application citing that was already doing business with a "wide variety of merchants, including grocers and drug stores, that sell similar products."[39]

References[edit]

  1. ^ Touryalai, Halah (4 October 2013). "Jamie Dimon's Power Struggle: Loses Bank Chairman Role, A Bigger Blow May Come Next". Forbes. Retrieved 2013-10-25. 
  2. ^ a b c d e The History of JPMorgan Chase & Co.. JPMorgan Chase & Co. 2008. Retrieved 2011-10-14. 
  3. ^ a b c "J.P. Morgan Chase & Co.". International Directory of Company Histories. St. James Press. 2001. Retrieved 2007-11-04. 
  4. ^ "History of Our Firm". JPMorgan Chase & Co. Retrieved 2011-10-14. 
  5. ^ Tully, Shawn (27 February 2009). "Will the banks survive?". Fortune Magazine/CNN Money. Retrieved 2009-12-17. 
  6. ^ "Citigroup posts 4th straight loss; Merrill loss widens". USA Today. Associated Press. 16 October 2008. Retrieved 2009-12-17. 
  7. ^ "$7.5 Bil. Chase Manhattan Bank Merger Set". American Banker. January 14, 1955. Retrieved November 10, 2013. 
  8. ^ Koppell, Gerard T. (16 March 2000). "Soaking the poor". The Economist (economist.com). Retrieved 2011-10-14. 
  9. ^ Rockefeller, David (15 October 2002). David Rockefeller: Memoirs. New York: Random House. pp. 124–25. ISBN 978-0-679-40588-7. 
  10. ^ "Chase Manhattan Bank". Chermayeff & Geismar. Retrieved 2011-10-14. 
  11. ^ Tett, Gillian (12 May 2009). Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe. New York: Free Press. p. 82. ISBN 978-1-4165-9857-2. 
  12. ^ Feeley, Jef; Church, Steven (27 September 2008). "WaMu lists debt of $8B in bankruptcy". Bloomberg News (Bloomberg.com). Retrieved 2011-10-14. 
  13. ^ "Q&A What former WaMu customers can expect". Seattle Post-Intelligencer (Houston Chronicle.com). 26 September 2008. Retrieved 2011-10-14. 
  14. ^ Benoit, David (27 October 2010). "J.P. Morgan, HSBC sued for silver manipulation". MarketWatch. Retrieved 2011-10-14. 
  15. ^ "JPMorgan Chase, Bank One complete merger" (Press release). JPMorgan Chase. 1 July 2004. Retrieved 2011-10-14. 
  16. ^ Ellis, David; Sahadi, Jeanne (25 September 2008). "JPMorgan buys WaMu". CNNMoney.com. Retrieved 2011-10-14. 
  17. ^ "Chase to Acquire Collegiate Funding Services". Business Wire. 15 December 2005. Retrieved 2011-10-14. 
  18. ^ "Thousands of Intelligence Documents Opened under the Nazi War Crimes Disclosure Act" (Press release). National Archives and Records Administration. May 13, 2004. Retrieved 2012-09-13. 
  19. ^ Breitman, Richard; Norman Goda, Timothy Naftali, Robert Wolfe (April 4, 2005). "Banking on Hitler: Chase National Bank and the Rückwanderer Mark Scheme, 1936–1941". U.S. Intelligence and the Nazis. Cambridge University Press. pp. 173–202. ISBN 978-0521617949. Retrieved 2013-09-13. 
  20. ^ a b Yeadon, Glen; Hawkins, John (June 1, 2008). The Nazi Hydra in America: Suppressed History of a Century. Joshua Tree, California: Progressive Press. p. 195. Retrieved 2013-09-13. 
  21. ^ Siemaszko, Corky (December 7, 1998). "Chase Banked On Nazis - Report". New York Daily News (newsmine.org). Retrieved 2013-09-13. 
  22. ^ Sutton, Anthony C. (2000). "Chapter Eleven: Wall Street-Nazi Collaboration in World War II". Wall Street And The Rise Of Hitler. Studies in Reformed Theology. ISBN 978-1568497266. Retrieved 2013-09-13. 
  23. ^ "Barclays to Compensate Jews". BBC News (BBC.com). December 17, 1998. Retrieved 2013-09-13. 
  24. ^ "World: Europe US banks gave Jewish money to Nazis". BBC News (BBC). February 3, 1999. Retrieved 2013-09-13. 
  25. ^ "JPMorgan Chase Still Going Strong Despite Paying Billions for Long List of Misdeeds". March 26, 2013. 
  26. ^ "JPMORGAN CHASE WHALE TRADES: A CASE HISTORY OF DERIVATIVES RISKS AND ABUSES, MAJORITY AND MINORITY STAFF REPORT". United States Senate, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, Committee on Homeland Security and Governmental Affairs, Carl Levin, Chairman, John McCain, Ranking Minority Member. March 15, 2013 Hearing. 
  27. ^ "JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses". March 15, 2013. 
  28. ^ "The Price of Evil at JPMorgan Chase". March 20, 2013. 
  29. ^ "Welfare for the Rich: U.S. Gives JPMorgan $14 Billion a Year in Subsidies". June 28, 2012. 
  30. ^ "JPMorgan Chase Caught "Misrepresenting" Credit Card Collections; Whistleblower Fired". March 16, 2012. 
  31. ^ DANIEL, JAMES. "'Moral issues' lead banks to refuse porn stars bank accounts and loans". Daily Mail UK. Retrieved 26 April 2014. 
  32. ^ Hilton, Perez. "EXCLUSIVE! Porn Stars Are Getting The Shaft From Chase Bank! AGAIN!! Accounts Closed For 100s In The Biz?!". Perezhilton.com. Retrieved 26 April 2014. 
  33. ^ del Castillo, Michael. ""Hundreds" of porn stars reportedly blacklisted from Chase Bank". Business Journals. Retrieved 26 April 2014. 
  34. ^ Staff. "Banks to porn stars your money's not welcome". NBC News. Retrieved 26 April 2014. 
  35. ^ DOTINGA, WILLIAM. "Look Who's Talking, Porn Mogul Tells Bank". Courthouse News Service. Retrieved 26 April 2014. 
  36. ^ Hymes, Tom. "Chase Sued for Denying Porn King Loan on ‘Moral’ Grounds". Adult Video News. Retrieved 26 April 2014. 
  37. ^ a b c Kernes, Mark. "JPMorgan Chase Closes Porn Star Accounts, Citing... 'Ethics'!?! The most ethical thing adult industry members can do is to close any Chase accounts they may have.". Adult Video News. Retrieved 26 April 2014. 
  38. ^ Lovability. "Process Credit Cards For Online Condom Purchases And End The Stigma Against Condoms". Change.org. Retrieved 26 April 2014. 
  39. ^ Kingkade, Tyler. "Chase Will Process Payments For Lovability Condoms After All". Huffington Post. Retrieved 26 April 2014. 

Further reading[edit]

External links[edit]