Surprise endings

The outraged institution rallied the banking establishment and fought off the raid. Thirty-two years later Steinberg's Reliance Group Holdings was forced to declare bankruptcy, while Chemical, by then merged with Chase Manhattan Corp., was celebrating its acquisition of the storied J.P. Morgan & Co., becoming one of the few likely survivors in the cutthroat world of global financial services.

The transformation of the not-so-lovingly nicknamed Comical Bank into J.P. Morgan Chase & Co. stands out as one of the most extraordinary business stories of the last decade. In this month's issue Senior Writer Justin Schack takes a close look at the man who put the bank over the top: CEO William Harrison Jr. ("Can a Nice Guy Finish First?"). Barely a year after being named to the top spot in 1999 - Chemical had by then become Chase - Harrison had spent $44 billion to acquire, in rapid fashion, Hambrecht & Quist Group, Robert Fleming Holdings, Beacon Group and finally J.P. Morgan.

Now Harrison must put the pieces together at a decidedly dicey time. The onetime University of North Carolina basketball player is preaching teamwork and patience.

"Harrison made his way to the top with a consensus-building style that served him well during the long economic expansion," says Schack. "Now he must guide J.P. Morgan through much tougher times than anyone anticipated. That's a huge challenge."

These days, business and finance are filled with surprises. One of the most startling comes from Europe, where the Continent's growth engine has uncharacteristically sputtered of late. It's a striking turn of events that Germany, the architect of European monetary union, now threatens the Continent's recovery and is depressing the value of the newly minted euro. The economic slowdown has nudged the country close to violating the 3 percent ceiling for government budget deficits under the European Union's Stability and Growth Pact. How ironic: It was Germany, after all, that insisted on a strict deficit standard to prevent Europe's more profligate states from dragging it down with them. Germany has undertaken some needed economic reforms, such as inaugurating private pensions, but as European Editor Tom Buerkle notes in "The German Dilemma", the country must now face up to more painful changes - in health and labor policies, for example - or run the risk of getting stuck in the doldrums.

Some observers doubt that Germany can come up with the right formula. But who would have bet 30 years ago on Chemical Bank?