immediately after the 2008 Financial Crisis , when regulators encouraged JPMorgan Chase and Bank of America to acquire institutions that were financially troubled .
In the wake of the financial crisis , the main issue that has arisen in the public arena is whether bank consolidation has affected the safety and soundness of the US financial system , and what can be done to protect it . Today , JPMorgan Chase heads the roster of US financial institutions in terms of asset size and market capitalization ( See Table 1 ). It is also the most profitable bank , and its share price has exceeded that of other large banks substantially since the onset of the GFC . In this respect , it serves as an example that “ being big is not necessarily bad .”
One blemish on Morgan ’ s record is the $ 34.5 billion in violations it has paid since it was acquired in 2000 . It has plenty of company in this regard : The tally for the six largest financial institutions over the past two decades stands at $ 180 billion ( See Table 2 ). This has caused critics to argue that , even if they are financially sound today , the largest institutions have become “ Too Big to Manage .”
Because of JPM ’ s stellar performance , Dimon has maintained the confidence of Morgan ’ s board and its shareholders . He successfully resisted an attempt by some to separate the roles of chairman and CEO in a vote taken in 2013 following large trading losses the bank incurred in London .
The big unknown is what will happen once Dimon steps down as CEO . Investors believe he is well ensconced as Morgan ’ s leader , but there is also a possibility he could become the next US Treasury Secretary . If so , Dimon ’ s appointment would fulfill the customary role Morgan ’ s leaders played as advisors to the US government , and he would be called on to opine on legislation impacting US banks .
As for the future of JPMorgan Chase , Dimon ’ s successors will face the daunting challenge of managing an institution that is extraordinarily complex . Moreover , new challenges lie ahead including the risk of cybersecurity , which Dimon has called the biggest threat in the financial services industry , as well as the rise of “ fintech ” that seeks to displace traditional banking models through the application of financial technology .
Based on how Morgan has performed throughout its storied history , the
TABLE 1 . Assets and Market Capitalization of 10 Largest US Bank Holding Companies , December 31 , 2019
Rank Bank Name
Total Assets ( billions of $)
underpinnings of the firm — talented management and people , fortress balance sheet and sophisticated risk management — are sound . They will likely keep it at or near the top of global financial institutions for years to come . This achievement would extend the legacy of J . P . Morgan . The caveat is that the current institution is vastly different from the one he founded and which Lew Preston envisioned as he embarked on transforming the firm .
Nicholas P . Sargen is an international economist turned global money manager who has written extensively on international financial markets . He worked on Wall Street for 25 years , holding senior positions with Morgan Guaranty Trust , Salomon Brothers Inc . and JP Morgan Private Bank .
Sources Chernow , Ron . The House of Morgan . Simon &
Schuster . 1990 .
Market Capitalization ( billions of $) Branches
1 JPM-Chase $ 2,687 $ 426 5,000 2 BoA 2,434 300 4,300 3 Citigroup 1,951 161 2,400 4 Wells Fargo 1,928 97 5,500 5 Goldman Sachs 993 83 0 6 Morgan Stanley 895 85 0 7 U . S . Bancorp 495 83 3,000 8 PNC 410 67 2,300 9 TD Bank N . A . 394 67 1,200 10 Capital One 379 58 750
Source : Federal Reserve , ADVs
TABLE 2 . Violations of Six Leading US Financial Institutions Since 2000 ( Billions of dollars )
Firm Number
Total Violations
Volume Bank of America 182 $ 82.6 $ 63.2 JP Morgan Chase 135 34.5 18.8 Citigroup 97 25.0 15.5 Wells Fargo 136 17.3 9.3 Goldman Sachs 37 13.1 9.2 Morgan Stanley 79 9.7 5.4
Source : Good Jobs First , Violation Tracker
Mortgage / Toxic Securities
“ Guess Who ’ s Defending Dodd-Frank .” Wall Street Journal . December 12 , 2016 .
Mallaby , Sebastian . The World ’ s Banker . Penguin Books . 2004 .
Langford , James . “ Why Jamie Dimon Believes ‘ Too Big to Fail ’ Has Been Solved .” TheStreet . com . April 4 , 2017 .
Lew Preston obituary . The New York Times . May 6 , 1995 .
Sargen , Nicholas . Global Shocks : An Investment Guide for Turbulent Markets . Palgrave Macmillan . 2016 .
Silver-Greenberg , Jessica and Susanne Craig . “ Strong Lobbying Helps Dimon Thwart a Shareholder Challenge .” The New York Times DealBook . May 21 , 2013 .
This article was adapted from JPMorgan ’ s Fall and Revival : How the Wave of Consolidation Changed America ’ s Premier Bank ( Palgrave Macmillan , 2020 ).
www . MoAF . org | Fall 2020 | FINANCIAL HISTORY 31