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JP Morgan Chase Receives A $14 Billion Annual Subsidy From The U.S. Government
http://thinkprogress.org/economy/2012/06/19/502311/study-jp-morgan-subsidy/?mobile=nc
Study: Mega Bank JP Morgan Chase Receives A $14 Billion Annual Subsidy From The U.S. Government
JP 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.
Study: Mega Bank JP Morgan Chase Receives A $14 Billion Annual Subsidy From The U.S. Government
JP 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.
Yeah, Fox was all over that thing like a duck on a june bug because of the bail out.
You could be right about Fox. I tried to delete that line but had already hit the 'post' button.
How I wish this forum had an edit.
And I too bank at a small local bank.
How I wish this forum had an edit.
And I too bank at a small local bank.
I bank at a local bank.... we also have a couple of credit unions here that are doing well.
I thought I remembered Fox beating the bank bailout into the ground....
I thought I remembered Fox beating the bank bailout into the ground....
" Too big to fail" contradicts everything I learned in school about capitalism.
The idea, as I understood it, was if a company wasn't doing a good job, it failed and a better one took it's place.
Bailing out the big guys is corporate socialism !
Why isn't Fox news screaming at the banks ?
If we all took our money out of the banks and refused to pay our taxes,do you think maybe, just maybe they'd get the message ?
The idea, as I understood it, was if a company wasn't doing a good job, it failed and a better one took it's place.
Bailing out the big guys is corporate socialism !
Why isn't Fox news screaming at the banks ?
If we all took our money out of the banks and refused to pay our taxes,do you think maybe, just maybe they'd get the message ?
"Too big to fail".... that's exactly what I am hoping for. Seems to be a source of cash flow regardless of what you do.
Unless you employed lots and lots of other people or handled lots of other peoples money, then who bails them out when you go bust? But you would never be considered to big to fail with those pennies.
I guarantee everyone here that if the government subsidizes me for about $14 billion, you'd never, ever have to bail me out....
So. How about some more de reg u lat ion.
They want to scream about medicare, ss and those kinds of things and how we must cut cut cut and all the while we are giving even more money to the rich as in this article and oil subsidys and oh my.
Of the Rich, By the Rich and For the Rich.
Yes. Its freaking sickening.
They want to scream about medicare, ss and those kinds of things and how we must cut cut cut and all the while we are giving even more money to the rich as in this article and oil subsidys and oh my.
Of the Rich, By the Rich and For the Rich.
Yes. Its freaking sickening.
I read it the same way you do.
It's sickening.
It's sickening.
So if I read this right, I am getting that we subsidize these outfits and then had to bail them out? If that is the case, it is practices like this that need to change in the banking industry and in government.
Until we change the way we do business, nothing is going to change.
Until we change the way we do business, nothing is going to change.
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