WASHINGTON (AP) – The Federal Reserve has cleared the way for Wall Street powerhouse J.P. Morgan Chase to combine with and absorb Chicago-based Bank One, forming the nation’s second-largest bank with more than $1 trillion in assets.

The Fed’s board of governors, including Chairman Alan Greenspan, voted 6-0 Monday to approve the megamerger, finding that the investment firm’s acquisition of the bank would not threaten competition or unduly concentrate banking resources.

The $58 billion merger will erase about 10,000 jobs by 2006 and the Bank One name sooner, in one of a crop of new consolidations in the financial services industry.

Some experts believe the combination will shift the U.S. banking industry landscape, setting off a cascade of deals among mid-sized institutions while creating opportunities for community banks to steal customers away.

New York-based J.P. Morgan Chase already is the No. 2 U.S. bank, with assets of some $801 billion and operations in more than 50 countries.

Bank One, the sixth-biggest bank with branches in 13 Midwest and Southwest states and in Florida, has $320 billion in assets and over 51 million credit cards issued.

The new institution, with some 2,300 branches, will have assets estimated at $1.12 trillion, trailing only titan Citigroup. It will be headquartered in New York, but will retain Chicago as the base for some retail operations.

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On the Net:

Federal Reserve Board: http://www.federalreserve.gov

J.P. Morgan Chase & Co.: http://www.jpmorganchase.com

Bank One Corp.: http://www.bankone.com

AP-ES-06-14-04 1745EDT