Bank robbery
JPMorganChase’s 2021 acquisition of Frank, a student finance planning platform, seemed like a great deal at the time, until it recently found out that nearly 4 million of the site’s 5 million-strong userbase didn’t exist.
The bank discovered that its hot, student-helping startup, which came with a $175m price-tag, had vastly overinflated its scale after they sent marketing emails to customers and ~70% bounced back. Jamie Dimon, the JPMorgan CEO who’s in Switzerland for Davos '23, said the acquisition was a “huge mistake”.
The JPMorgan machine rolls on
However, while the "Frank fraud" has dominated headline mentions for the nation's largest lender, JPM’s earnings report from Friday suggests that, whilst a lawsuit is underway, the bank won’t be losing too much sleep over the botched deal.
JPM reported a whopping $37.7bn net income figure for 2022, taking the company's total profits over the last 15 years — a cycle that's seen global financial meltdowns, recessions and a pandemic — to more than $370bn.
The secret sauce is that JPM doesn't rely too heavily on any one business. When it's boom time, the investment banking division thrives. When times are leaner, the bank’s proficiency in the boring-but-robust aspects of the job — providing bank accounts and credit cards, for instance — picks up the slack. Right now for example, JPM is a beneficiary of the rising interest rates that we’ve heard (and written) so much about, even as dealmaking and corporate activity slow.
