77% of JP Morgan’s Net Income Comes from Government Subsidies

[Ghost of Huey Long]

JP Morgan’s credit rating would be much lower without government backing.

As Bloomberg noted last week:

JPMorgan benefited from the assumption that there’s a “very high likelihood” the U.S. government would back the bank’s bondholders and creditors if it defaulted on its debt, according to the statement. Without the implied federal backing, JPMorgan’s long-term deposit rating would have been three levels lower and its senior debt would have dropped two more steps, Moody’s said.

And as the editors of Bloomberg pointed out a couple of weeks ago:

JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fundand our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy...


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. They’ve also provided more direct support: Dimon noted in a recent conference call that the Home Affordable Refinancing Program, which allows banks to generate income by modifying government-guaranteed mortgages, made a significant contribution to JPMorgan’s earnings in the first three months of 2012.

http://www.zerohedge.com/contributed/2012-07-01/77-jp-morgan%E2%80%99s-net-income-comes-government-subsidies?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

[Angry Dragon]

1. Why is this man not in prison??

welfare cheat

[kestrel91316]

2. $14 billion a year in CORPORATE WELFARE. Let the free market decide if JP Morgan stands or falls,

and stop the meddlesome governmental meddling.

[mckara]

3. Yeah, 77% of their Profits: 100% of their Losses!!!!

[Romulox]

4. That's "one of the smartest bankers we got..." nt

[BootinUp]

5. I want to believe it, but seems far-fetched.

to lazy to click the link.

[Po_d Mainiac]

8. Far fetcthed?

The JP Morgue pays dearly for that money.

It's called campaign contributions

[Cali_Democrat]

11. After everything we've learned since the 2008 financial crisis...

how can this seem far fetched to you?

[Igel]

13. It is far fetched.

The game of "telephone" continues.

JPM holds money. It pays interest on that money. It's considered a low risk investment, so it pays a interest rate. That's normal: If you're not likely to default, you pay lower interest.

Now, JPM could default. It's possible. But everybody knows that if JPM is close to defaulting it'll get a loan from the US government. Yeah, it'll have to repay the loan, with interest, but it won't default. A bank could be insured against default, and pay a lot of money; in this case, JPM's "insurance payment" is the damaged reputation that would happen, the oversight that would come into play, and the interest they'd pay on the money. For now, that's pretty much $0.

Then again, it also costs the US government pretty much $0. Perhaps, in a different time, the inherent risk of dumping billions of dollars in JPM, coupled with the US government's near-inability to pay its own debt, could cause a jump in US government interest rates (like what's been going on in Europe), but we're not there. At least not yet.

Somebody estimated what JPM would have paid in interest last year if investors said, "If JPM gets close to default, the US government won't bail it out." The interest rate goes up. Therefore profits are lower.

And they declared that the difference between their hypothetical profit level and JPM's actual profits was a kind of "virtual subsidy."

Those who don't understand that no money actually traded hands, no check was cut, etc., have decided that this was a real cash subsidy, one that takes place year after year. It feeds their outrage and easily slips past their critical thinking filter.

[glowing]

6. Who's the real welfare, caddy, driving queen?

There is so much to fix... Mostly, we need to fix the $ = power and buys govt pluse the enforcement.

[bluedigger]

7. They should pay Dimon and his henchmen more.

Clearly, they lack sufficient motivation.

[meow2u3]

9. Jamie Dimon: THE biggest welfare queen in the country

[TxVietVet]

10. Here's another comment from Bloomberg.

http://www.bloomberg.com/news/2012-06-18/dear-mr-dimon-is-your-bank-getting-corporate-welfare-.html

[stockholmer]

12. Jamie Dimon wore US Presidential cufflinks as he testified before congress AND sits on the NY Fed

board, as a Class A director.

Pretty much sums up the systemic control that the banksters' industrial-central bank-military-media-energy-health care-agribusiness-corporate-fascistic government complex holds over the world's citizens.



http://www.motherjones.com/kevin-drum/2012/06/what-do-jamie-dimons-cufflinks-tell-us-about-financial-industrial-complex

JPMorgan Chase CEO Jamie Dimon testified before Congress today about his bank's gigantic trading losses a few weeks ago, and the gist of his testimony was — well, something or other. Basically, nobody laid a glove on him, and Republican senators in particular practically genuflected in his presence. No sir, nobody's thinking about regulating you any more than you already are! Wouldn't dream of it!

Or something like that. But the real news that has the chattering classes chattering was Dimon's fashion accessorizing. It seems that he was wearing presidential cufflinks, and nobody thinks this was just an offhand decision as he dashed out of his mansion this morning. But the question is, what message was he trying to send? There are several possibilities:

■Don't fuck with me. The president has my back.
■Give it up, GOP. I still support Obama no matter how much you suck up to me.
■Hey Obama. See these? Don't take them for granted.

But maybe he meant something else entirely. We need to engage in some Dimonology here. Help me out.

snip