{"id":2803,"date":"2023-05-01T13:35:24","date_gmt":"2023-05-01T17:35:24","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/jpmorgans-history-of-helping-to-rescue-other-banks\/"},"modified":"2023-05-01T13:35:24","modified_gmt":"2023-05-01T17:35:24","slug":"jpmorgans-history-of-helping-to-rescue-other-banks","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=2803","title":{"rendered":"JPMorgan’s History of Helping to Rescue Other Banks"},"content":{"rendered":"

When U.S. regulators find themselves with a banking emergency on their hands, they know who to call: the House of Morgan.\u00a0<\/p>\n

From the Panic of 1893 to the panic of 2023, the bank founded by John Pierpont Morgan Sr. has been solicited to lead the rescue whenever the American financial system has faced existential episodes. The takeover of
\n First Republic Bank
\n by
\n JPMorgan
\n is just the latest example.<\/p>\n

\n

The JPMorgan-led rescues have on the whole been good for the U.S., and very good for JPMorgan. But they haven\u2019t come without controversy.<\/p>\n

As historian Richard A. Naclerio wrote of J.P. Morgan Sr.\u2019s role in the halting the Panic of 1907: \u201cHe was touted by many Americans as a true patriot and selfless beacon of financial hope for the country. But, to those who rigidly examined his actions, he was a monster who fed off the demise of economic destruction.\u201d<\/p>\n

Morgan first had a hand in the Panic of 1893. With U.S. gold reserves falling, Morgan persuaded President Grover Cleveland to take a $65 million loan. Morgan basically bailed out the country, though Cleveland shouldered the blame for the depression and was denied re-election in 1894.<\/p>\n

When the Panic of 1907 began\u2014started by an ill-advised attempt to corner the copper market\u2014Morgan was following the news from an Episcopal Conference in Virginia. Returning north, with an entourage including two bishops, Morgan sent word for the other leading Wall Street bankers to meet him on the morning of Oct. 20 at his Manhattan brownstone.<\/p>\n

\u201cHe basically locked them all in and wouldn\u2019t open the doors until they reached a deal,\u201d said Odeon Capital analyst Dick Bove.\u00a0<\/p>\n

\u201cJ. Pierpont Morgan Assumes Control of New York Finances,\u201d blared the headline in the Birmingham, Ala., News, on Oct. 23. \u201cSituation Shows Marked Improvement.\u201d<\/p>\n

Morgan\u2019s banking syndicate bailed out several struggling banks and is credited with shoring up the nation\u2019s banking system in general.\u00a0<\/p>\n

Morgan also looked after his own interests.<\/p>\n

\u201cThe takeovers immediately began,\u201d the historian Naclerio wrote. \u201cJ.P. Morgan swooped in and absorbed the Mercantile Trust, and six more companies and banks, including the two largest banks that were hit hardest.\u201d<\/p>\n

Congress launched an investigation into Morgan\u2019s \u201cmoney trust.\u201d The report of the so-called Pujo Committee found \u201cthat no less than 18 different major financial corporations were under the complete control,\u201d of the banking consortium, wrote Naclerio.\u00a0<\/p>\n

No bankers were ever charged. But the panic and its aftermath resulted, in 1913, in the creation of the Federal Reserve System to act as America\u2019s lender of resort. Morgan, the previous lender of last resort, died on March 31, 1913.<\/p>\n

The Stock Market Crash of 1929 gave Morgan\u2019s son, J.P. \u201cJack\u201d Morgan Jr., his chance to save the financial system. It didn\u2019t go as well.<\/p>\n

Morgan followed his father\u2019s playbook and arranged a meeting of the heads of Wall Street as the market plummeted on Oct. 24, Black Thursday.<\/p>\n

The decline \u201cwas checked after several of the country\u2019s most influential bankers had met at the offices of J.P. Morgan & Co.,\u201d Barron\u2019s<\/em> wrote in its Oct. 28 issue. \u201cOn Friday the formation of a market pool with buying power of $100,000,000 was announced.\u201d<\/p>\n

This sum proved to be a drop in the bucket. Oct. 28 would go down in history as Black Monday, to be followed by Black Tuesday. The crash was unstoppable.<\/p>\n

Morgan Jr. had another chance to step up, in December 1930, after a run on the Bank of United States, a modest lender (despite its name) that served New York City immigrant communities.<\/p>\n

When asked to help by New York banking regulators, Morgan refused.\u00a0<\/p>\n

\u201cPeople who were in the room reported that it was his anti-immigrant bias that led him to say, \u2018I am not helping these people,\u2019\u201d said the economist Abby Joseph Cohen. As a result, the bank failed and started a general run on lenders nationwide that brought on the Great Depression.<\/p>\n

The 2007 Financial Crisis saw JPMorgan CEO Jamie Dimon take the lead with the high-profile acquisitions of Bear Stearns and
\n Washington Mutual.<\/span>
\n These made it the No. 1 bank in the U.S.\u00a0<\/p>\n

Dimon\u2019s moves had their critics, as he acknowledged in a letter to bank employees in 2018.<\/p>\n

\u201cCounter to what most people think, many of the extreme actions we took were not done to make a profit; they were done to support our country and the financial system,\u201d Dimon wrote.<\/p>\n

And this time around, Dimon made a similar point. \u201cOur government invited us and others to step up, and we did,\u201d the CEO said in a statement. \u201cOur financial strength, capabilities and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.\u201d<\/p>\n

Another opportunity provided by the House of Morgan.<\/p>\n

This article, originally published on March 18, was updated on May 1 with the latest news on First Republic bank. <\/em><\/p>\n

Write to editors@barrons.com<\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

When U.S. regulators find themselves with a banking emergency on their hands, they know who to call: the House of Morgan.\u00a0 From the Panic of 1893 to the panic of 2023, the bank founded by John Pierpont Morgan Sr. has been solicited to lead the rescue whenever the American financial system has faced existential episodes. […]<\/p>\n","protected":false},"author":1,"featured_media":2804,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-2803","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nJPMorgan's History of Helping to Rescue Other Banks | iFintechWorld<\/title>\n<meta name=\"description\" content=\"When U.S. regulators find themselves with a banking emergency on their hands, they know who to call: the House of Morgan.\u00a0From the Panic of 1893 to the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=2803\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta 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