JPMorgan is a recipient of welfare…corporate welfare that is:
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.
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Furthermore,
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.
American taxpayers helped pay the bill that have resulted in billion dollars of trade losses:
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.
Like all subsidies, the taxpayer largesse distorts supply. If the government supports corn farmers, you get too much corn. If the government subsidizes banks, you get too much credit. As of March, households, companies and government in the U.S. had amassed debts of $38.6 trillion, or 2.5 times the country’s gross domestic product. That’s up from 1.3 times in 1980. The picture is similar in the euro area, where debt outstanding is 1.8 times GDP, double the level of 1995.
The oversupply of credit -- also supported in the U.S. by government-backed lenders Fannie Mae and Freddie Mac, and by tax breaks on mortgage interest -- encourages risky behavior. People buy houses they can’t afford, companies borrow too much for acquisitions, and banks employ excessive leverage to boost the returns they can offer their shareholders. The result is abloated finance industry: As of 2011, the sector accounted for 8.3 percent of the U.S. economy, compared with 4.9 percent in 1980.
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In short this is nothing more than corporate welfare, which is hazardous to the economic viability of our nation:
Lawmakers and regulators need to recognize just how costly business as usual will be. When Dimon pushes back against 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
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