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Excerpt: "...Bloomberg News pointed to a new study showing that JPMorgan Chase receives a $14 billion annual subsidy from the US government."

Jamie Dimon testifies before a US Senate Banking Committee full committee hearing, 06/13/12. (photo: Karen Bleier/AFP/Getty Images)
Jamie Dimon testifies before a US Senate Banking Committee full committee hearing, 06/13/12. (photo: Karen Bleier/AFP/Getty Images)



JPMorgan Gets $14 Billion a Year From the US Government

By Pat Garofalo, ThinkProgress

24 June 12

 

P Morgan Chase CEO Jamie Dimon testified on Capitol Hill today for the second time in two weeks, appearing before the House Financial Services Committee to discuss the trading debacle that has cost his bank billions of dollars. Before the hearing, Bloomberg News pointed to a new study showing that JP Morgan Chase receives a $14 billion annual subsidy from the U.S. government. This subsidy is due to JP Morgan’s reputation as a too-big-to-fail bank, which lets it borrow money at lower rates than other, less systemically risky banks:

JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. [...]

In a recent paper, two economists - Kenichi Ueda of the IMF and Beatrice Weder Di Mauro of the University of Mainz - estimated that as of 2009 the expectation of government support was shaving about 0.8 percentage point off large banks’ borrowing costs. That’s up from 0.6 percentage point in 2007, before the financial crisis prompted a global round of bank bailouts.

To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education.

JPMorgan’s share of the subsidy is $14 billion a year, or about 77 percent of its net income for the past four quarters. In other words, U.S. taxpayers helped foot the bill for the multibillion-dollar trading loss that is the focus of today’s hearing.

At the last hearing, the Senate all but groveled at Dimon’s feet, and today’s questioning was not much better. But Rep. Brad Sherman (D-CA) did ask Dimon about the Bloomberg study. Dimon denied that his bank receives a funding advantage due to its size, saying that the bank is “probably pretty much like everybody else.” Watch it:

As Bloomberg’s editors put it, “when Dimon pushes back against [regulations like] capital requirements or the Volcker rule, it’s worth remembering that he’s pushing for a form of corporate welfare that, left unchecked, could lead to a crisis too big for the government to contain.” Yet that’s precisely what he did today.

 

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+32 # jlohman 2012-06-23 07:21
I love it. Campaign bribes do wonders. When will the voters learn?

Jack Lohman
 
 
-33 # John Locke 2012-06-23 09:54
As soon as they can stop living in denial and not before!

This is right now, under the clown Obama!
 
 
+20 # Adoregon 2012-06-23 11:58
Wow! What a big welfare cheat.
 
 
+37 # PGreen 2012-06-23 08:12
Free market Capitalism is inherently unstable and leads inexorably to State Capitalism (China) or Corporate Capitalism (USA)-- though both countries are moving toward an oligarchical fusion of the two forms. Both have huge levels of inequality. The "social market economy" variety, in place here from FDR through Nixon, is a bit more economically stable, as it provides a higher public standard of living, but still resists the necessary regulatory oversight to endure.
Critics of Democratic Socialism take note.
There is no ethical or practical justification for JP Morgan being subsidized. Break them up.
 
 
+29 # jlohman 2012-06-23 08:32
Don't break them up, nationalize them!
 
 
+17 # John Locke 2012-06-23 09:56
jlohman: Absolutely...Th at is what I have been saying...It may be up to us to bring them down... talk to lawyers about a class action, especially if you have had your rate increased under the LIBOR standard...Now is a chance to bring them down and then to nationalize them!
 
 
+18 # JSRaleigh 2012-06-23 11:19
Quoting jlohman:
Don't break them up, nationalize them!


Break them up AND nationalize them.
 
 
+13 # hobbesian 2012-06-23 12:16
If we (through our government although I have no idea why, are paying them, from our tax payments, then - isn't J P Moremoney already nationalized? We should be able to vote at their AGMs - I say we are the shareholders. Or am I wonky? In any cast, let's stop assigning them billions with which they then pay them selves billions. Why didn't the IMF report this before. Where is the outrage; I'm the mother of a talented man - out of work, but working working hard for nothing to find a job and I find this nausegating and angering. Yes I am very angry.
 
 
+14 # Granny Weatherwax 2012-06-23 12:26
The US taxpayers paid for them, they should own them.

What do Greedy One Percenters have against ownership?
 
 
+14 # truthbug 2012-06-23 08:13
We need two things, and I'm not being naive, silly, or unrealistic: 1) A Constitutional Amendment to require that all government elections be only publicly funded, with no private funds allowed, and 2) Presidents, Congressmen, etc. can serve only One Term (duration of which can be set after careful deliberation).
 
 
+7 # jlohman 2012-06-23 08:33
Absolutely. The second term only leads to campaign bribes.
 
 
+3 # paulrevere 2012-06-23 09:52
...and lame ducks.
 
 
+14 # John Locke 2012-06-23 09:59
jlohman: The first term does also...we need to stop private funding of elections, then watch our elected officials standard of living closely there are other ways to bribe aside from lobbyists
 
 
+4 # panhead49 2012-06-23 09:10
Quoting truthbug:
We need two things, and I'm not being naive, silly, or unrealistic: 1) A Constitutional Amendment to require that all government elections be only publicly funded, with no private funds allowed, and 2) Presidents, Congressmen, etc. can serve only One Term (duration of which can be set after careful deliberation).


We just voted in term limits in CA for our state level, ahem, 'leaders'. Far too many folks didn't bother reading the wording of the initiative itself. The term limits only apply to those who will be voting in, in the future. So we are stuck with the current crop of chowderheads for potentially the rest of their useless (but well paid & benefited) lives. I love the concept of limits - absolutely necessary. But also necessary are folks that read the DAMN FINE PRINT!!

And does anyone know how you can set yourself up as a bank? Too old to go out a rob people face to face (and that really isn't where the big bucks are at anyway). grrrrr
 
 
+2 # John Locke 2012-06-23 10:00
Yes it isn't that difficult, We can pull our resources and set it up in any state as a state chartered bank...I can help if you are serious
 
 
+2 # truthbug 2012-06-23 10:12
I'm excited and pleased with the favorable response here. Our country is in such sad shape that the simplest, most necessary fixes are easy to think of - and doable, IF the people are behind it. It's not rocket science. Although the two proposed amendments cannot solve all problems human beings will generate as a result of their dark side, I can't think of any other simple, few remedies that would go so far as these. An analogy here is the guy that can't start his car in the morning, asks his neighbor to have a look, and when the neighbor lifts up the hood, there's no engine. "You need an engine, someone must've stolen the one you had when you were on vacation." THAT'S how bad things are now, and the major fix needed is obvious: modify an outdated Constitution!! Spread the good word!!
 
 
-9 # Regina 2012-06-23 10:18
So you want a Congress of perpetual rubes and naifs (or naives -- just a few) being "guided" by perpetual lobbyists. And you'll save the lobbyists tons of money by requiring public funding for all elections. Whoopee!!!
 
 
+3 # Granny Weatherwax 2012-06-23 12:33
One term only might be a little hard to manage, unless they can run again after having left office for one turn, but public funding of elections should essentially castrate the lobbyists, leaving the congress people to care mostly for their constituents, i.e. whom they whould be caring for to start with.
 
 
+7 # ronnewmexico 2012-06-23 08:26
The voters will learn the necessity of knowing about such things quite unfortunately by my read....when things get so so bad their very survival depends upon it.

Till then 30 second sound bite and political add aimed at the lowest common voting denominators... playing their baser emotions is what determine things.

When we can no longer afford such emotional extravagances as voting for who looks or sounds like us or calls us great or who says it is them not us that is the cause , then they will learn. But that requires a great great motivator.

Fear not...... all things economic are being pushed to serve and feed these large large financial beasts. Foodstamps now are to be the next thing cut.....knowing not perhaps do they...... when starved..... people become acutely aware of the why and wherefore of who is doing the starving.
Let out that genie from its bottle..and it will not be pushed back in.

But they are so dim...they see not what they hazard.
All they want, and will probably now get, as corporations rule in every political extant and govern who knows what and when. All social programs will be eliminated for food for these beasts, But their very excess it is what will be their undoing.

They know not what they eventually hazard.
 
 
+1 # julileegal 2012-06-23 08:47
Quoting jlohman:
Don't break them up, nationalize them!

Yes, but by then it will be too late.
 
 
0 # John Locke 2012-06-23 10:02
julileegal: Not necessarily, a class action could do the trick quite quickly, some discovery and a motion for Summary Judgment, 6 months!
 
 
+4 # Pwarren 2012-06-23 09:10
Too bad Jamie and his ilk cannot be "raptured" tomorrow and save us all a lot of work, but evidently the "God" is busy elsewhere.
Or Maxims "Uncle Billie" would be greatly appreciated right about now.
Pardon all the snark but I'm 80 and have seen this play before.
Can't help but wonder how many of the 7B of us realize that this planet is Heaven and as close to it as we are ever going to get. If one doubts this one has only to look at what surrounds it - right?
Anyway my best to you all and thanks for the thoughtful comments.
 
 
0 # John Locke 2012-06-23 10:03
Pwarren: only one god will want them and he isn't up high, look toward yout shoes!
 
 
-1 # Granny Weatherwax 2012-06-23 12:35
Actually rapture already happened, he only took his son back.
The rest of us are left behind.
 
 
+3 # tedrey 2012-06-23 09:55
Subject: Democrats: Take a stand for cleaning up Wall Street

Many Americans believe that there is enough evidence to either indict or remove from their positions various Wall Street malefactors, whose criminal and/or self-serving actions crumbled the economy. According to the DNC's 2012 Presidential Election Year Survey, this is not considered an issue to be raised in this year's election campaign. It should be.

That's why I created a petition to Democratic National Committee, which says:

"As long as Wall Street figures are rewarded, rather than sanctioned, for their crimes and/or incompetence, there is no salvation for the economy or the nation. If the Democratic Party does not take a stand on this, who will? Please stand up for law and honesty in this campaign."

Will you sign this petition? Click here:

http://signon.org/sign/democrats-take-a-stand-2?source=c.em.cp&r_by=1129255

Thanks!

Ted
 
 
+4 # John Locke 2012-06-23 10:07
Ted: I appreciate your attempt, however they don't care, the real petition should have said, we will not be voting democratic until this becomes an issue and Wall Street is cleaned up...But also be prepared to stop voting democrat they won't!
 
 
+7 # truthbug 2012-06-23 10:16
Ted, with all respect, I'm afraid your approach is like putting a bandaid on a shotgun wound directly to the chest. We need a fundamental cure, such as the two amendments to the Constitution I suggest above. Better to arouse Public interest to that end. It's no more difficult to do that than to rally for the superficial fix you propose here.
 
 
+1 # dick 2012-06-23 10:15
Jamie is Obama's BFF, until Dimon dumps him for a different whore with even bigger $pouts. I hope every Dem voter is telling the Party the party's over. They HAVE TO choose. Main Streen OR Wall St. 0.01% OR 99.99%. Send $$ to Liz, prepare for 2016.
 
 
+4 # railroadmike 2012-06-23 10:54
JP Morgan has been a pain to America for decades. If you need proof Google "The Business Plot" or go to YouTube. This should wake a few people up. Our politicians and media will never bring the subject up. In fact Nixon tryed to have the book banned on the subject. "The Plot To Seize The White House' by Jules Archer.
 
 
0 # John Locke 2012-06-24 06:42
railroadmike: Thank you, but lets add some more here about JP Morgan, They created the panic of 1907 through a rumor about the failure of some prestigious New Your Banks like the Knickerbocker which led to (Surprise) the Aldrich–Vreelan d Act in 1908...and the beginning of the Federal Reserve Act of 1909 and the act itself in 1913...and the demise of Washington Mutual also by a rumor JP Morgan started!
 
 
+3 # hattie12KY 2012-06-23 11:47
I've been listening to House of Cards by William D. Cohan. Amazing how Jamie Dimon was seen as the life saver, the go-to guy for failing financial institutions.

What a fine mess he and his cronies have got us into!
 
 
+1 # lark3650 2012-06-24 04:23
Jaimie Dimon and all the others like him have made a career and mastered the art of swindling people out of their earnings.
 
 
0 # lnason@umassd.edu 2012-06-24 16:48
Great exposition. Thanks for bringing it to us.

Lee Nason
New Bedford, Massachusetts
 
 
0 # mrsdalloway 2012-06-25 14:08
Looking over the comments, it seems most think it is Dems fault. This mess with Wall Street has been going on for a very long time. It became worse when Rep. deregulated wallstreet, and then came the Bush tax cuts. After that Reps pushed through Citizens United to make it easier for corporations to buy elections. Then there the farce of voter id. Shall I go on?
 

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