ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Panic of 1907 was a financial crisis set off by a series of bad banking decisions and a frenzy of withdrawals caused by public distrust of the banking system. J.P. Morgan and other wealthy Wall Street bankers lent their own funds to save the country from a severe financial crisis.

Detailed explanation-2: -The Panic of 1907 gave impetus to plans to impose more government oversight and public responsibility to bail out financial markets, leading to the creation of the Federal Reserve System a few years later.

Detailed explanation-3: -J.P. Morgan acquired investment bank Bear Stearns and the retail banking assets of Washington Mutual during the tumult of the crisis. Those takeovers later lead to billions of dollars in litigation costs tied to mortgages, and Dimon has said that in hindsight he wouldn’t have done the Bear Stearns deal for that reason.

Detailed explanation-4: -J.P. Morgan was known for reorganizing businesses to make them more profitable and stable and gaining control of them. He reorganized several major railroads and became a powerful railroad magnate. He also financed industrial consolidations that formed General Electric, U.S. Steel, and International Harvester.