Leg100 Assignment 2 Jpmorgan Chase

WEEK 8 ASSIGNMENT 2

WELLS FARGO COMPARED TO JPMORGAN CHASE

HASSINA DRISS

STRAYER UNIVERSITY

LEG100 BUSINESS LAW 1

Pr RENEE BERRY

DECEMBER 2ND, 2013

1- INTRODUCTION:

a) Wells Fargo was founded in 1852 by Henry Wells and William G. Fargo a joint stock association with an initial capitalization of $300,000 to provide banking services in California. In 1855, the bank faced its first crisis when the California banking system collapsed as a result of unsound speculations and were forced to close their doors. The following Tuesday, Wells Fargo reopened in sound condition, despite a loss of one-third of its net-worth. They were one of the few that survived the panic, partly because it kept enough assets on hand to meet customer’s demands instead of transferring all its assets to New York. Surviving the panic, gave Wells Fargo an edge on competition and a reputation of dependability and soundness which allowed it to rapidly expand. The war years were prosperous and uneventful for Wells Fargo and in 1960 they merged with American Trust Company. In 1967, Wells Fargo along with three other California Banks introduced a Master Charge card (now MasterCard) to its customers as part of a plan to challenge Bank of America in the consumer lending business. Wells Fargo’s investment services became a leader in the late 70s. The bank’s aggressive marketing of its services included seminars explaining “modern portfolio theory”. In 1981, the banking community was shocked by a $21.3 million embezzlement scheme by a Wells Fargo employee, one of the largest embezzlements ever. L. Ben Lewis pleaded guilty to writing phony debit and credit receipts to pad the accounts of his cronies and received $300,000 in return. The early 80s saw a sharp decline in Wells Fargo’s performance, one hundred branches were eliminated and 3,000 jobs were cut. The latest merger with Norwest caused a negative impact on the financial performance of Wells Fargo as well as its stock price. With the...