The Wall Street Journal’s front-page story on Jamie Dimon’s efforts to prevent regulatory reform sent me off on a tangent this morning with this good anecdote:
In April 2009, Ohio Democrat Rep. Marcy Kaptur confronted Mr. Dimon at dinner at a Washington hotel with other lawmakers. “I have just come from my district and our Realtors told us this morning your company was absolutely the worst to deal with in terms of the foreclosure crisis,” Ms. Kaptur recalls saying to the CEO. “He looked at me, straight in the eye, and said, ‘That can’t possibly be true.’ “
She rattled off all the people in her district who were losing their homes. Mr. Dimon replied that J.P. Morgan employed 20,000 people in her state, and that he often spoke with the governor and the mayor of Columbus, Ohio, where the bank has extensive call-center and data-processing operations.
In other words, you can’t touch me. This is a novel twist on too big to fail. Dimon is telling Kaptur that his bank is too big an employer in Ohio to fail, so don’t crimp my profits. And the thing about talking to the governor and mayor is just weird. Is he name-dropping people who might threaten her politically?
And it got me thinking: Why would the CEO of JPMorgan Chase be talking “often” with two-bit politicians like the mayor of Columbus, Ohio (and the governor for that matter)? I had a sneaking suspicion, and yep:
Leaders from the Ohio Governor Ted Strickland’s Office and Departments of Development from Ohio and the cities of Columbus and Westerville worked with Chase to provide generous incentives to attract the new jobs to central Ohio.
Ol’ Jamie may claim to have taken that $25 billion in TARP bailout funds for the team, but that’s hardly the only government teat he’s latched onto—this time to put 1,150 low-paying call-center jobs in Ohio. And at a time when Dimon’s pal and benefactor, the Ohio governor, is proposing this:
Strickland has proposed using nearly $7 billion in one-time money to balance the upcoming two-year budget, including tapping about $5 billion in federal stimulus money, draining the entire $948 million rainy-day fund, refinancing certain state debt to generate extra cash and other moves.
Corporate welfare paid for by the crushed taxpayers of Ohio (unemployment rate: 11.8 percent) who are struggling in no small part because of the activities of Dimon’s current bank, which after all essentially invented the credit-default swaps (before Dimon was there) that were instrumental in causing the crisis.
How much corporate welfare? JPMorgan gets an estimated $21 million in tax subsidies. Average starting wage for a Chase call center employee in Columbus? $11.50 an hour. Which helps bring down those average JPMorgan wages. Bonus!
The Democratic governor, Ted Strickland, boasts that his largesse helped create 1,150 jobs and “retain 13,362 jobs,” which implies that JPMorgan would have packed up and left the state without the payoff (it employees about 18,000 there).
The Journal mentions that Dimon’s not-so-subtle lobbying of Kaptur is the norm:
Every politician on Mr. Dimon’s appointment list receives a package in advance of their meeting. The dossier includes information such as how many people the bank employs in the lawmaker’s home state and how much the bank pays in taxes.
It seems that Dimon passes this stuff out to the press, too. Here’s the Columbus Dispatch in 2008 in a glowing profile that included a Dimon interview:
Ohio:Deposits: $16.3 billion*
Employees: 17,500
Branch offices: 291
ATMs: 854
Employee wages/benefits: $1.4 billion
Charitable donations: $4.8 million
Central Ohio:
Deposits (Franklin County): $5.7 billion*
Employees: 14,500
Branch offices: 63**
ATMs: 213
Employee wages/benefits: $900 million
Charitable donations (2008): $3.2 million
Never mind that if Chase didn’t have all those numbers someone else would. But Ohio’s gain is somebody else’s misfortune (although it wouldn’t surprise me if many of these jobs are being created to deal with the crappy mortgages Chase wrote). Corporate welfare like this is a zero-sum game. Here’s news from Baton Rouge a couple of months ago:
Chase is closing a national processing center in Baton Rouge, a move that will eliminate 247 account maintenance jobs downtown, the company announced Thursday…
Kaptur spoke of her problems with JP Morgan before on Bill Moyers:
http://www.pbs.org/moyers/journal/10092009/watch.html
"MARCY KAPTUR: Let me give you a reality from ground zero in Toledo, Ohio. Our foreclosures have gone up 94 percent. A few months ago, I met with our realtors. And I said, 'What should I know?' They said, 'Well, first of all, you should know the worst companies that are doing this to us.'
MARCY KAPTUR: I said, 'Well, give me the top one.' They said, 'J.P. Morgan Chase.' I went back to Washington that night. And one of my colleagues said, 'You want to come to dinner?' I said, 'Well, what is it?' He said, 'Well, it's a meeting with Jamie Dimon, the head of J.P. Morgan Chase.' I said, 'Wow, yes. I really do.' So, I go to this meeting in a fancy hotel, fancy dinner, and everyone is complimenting him. I mean, it was just like a love fest.
MARCY KAPTUR: They finally got to me, and my point to ask a question. I said, 'Well, I don't want to speak out of turn here, Mr. Dimon.' I said, 'But your company is the largest forecloser in my district. And our Realtors just said to me this morning that your people don't return phone calls.' I said, 'We can't do work outs.' And he looked at me, he said, 'Do you know that I talk to your Governor all the time?' He said, 'Our company employs 10,000 people in Ohio.'
MARCY KAPTUR: And I'm thinking, 'What is that? A threat?' And he said, 'I speak to the Mayor of Columbus.' I said, 'Why don't you come further north?' I said, 'Toledo, Cleveland, where the foreclosures are just skyrocketing.' He said, 'Well, we'll have someone call you.' And he gave me a card. And they never did. For two weeks, we tried to reach them. And finally, I was on a national news show. And I told this story. They called within ten minutes. And they said, 'Oh, we'll work with you. We'll try to do some workouts in your area.'
We planned the first one after working with them for weeks and weeks and weeks. Their people never showed up. And it was a Friday. Our people had taken off work. They'd driven from all these locations to come. We kept calling J.P. Morgan Chase saying, 'Where's your person? Where's your person?' And they finally sent somebody down from Detroit by 3:00 in the afternoon. But out people had been waiting all morning and a lot of people that's how they treat our people."
Both her and Simon Johnson had interesting things to say. Marcy, about six minutes into the video, sounds really really angry as she relates the JP Morgan story.
And in other news, Matt Taibbi just penned a tragedy set in Jefferson County, Alabama,
http://www.rollingstone.com/politics/story/32906678/looting_main_street/print
JP. Morgan plays the part of Iago.
#1 Posted by Thimbles, CJR on Thu 8 Apr 2010 at 12:22 PM
That is excellent. Many thanks for that, Thimbles.
#2 Posted by Ryan Chittum, CJR on Thu 8 Apr 2010 at 02:41 PM
I wonder if they're from Ohio.
http://www.reuters.com/article/idUSTRE63C5LO20100413
"The JPMorgan Chase & Co executive was at a congressional hearing in Washington when a lawmaker asked him who mortgage borrowers could turn to if they felt his bank's employees were not helping them hold onto their homes.
"Come to me," said David Lowman, chief executive for JPMorgan Chase & Co's home mortgage business in response to the question from Massachusetts Democrat Barney Frank.
Minutes later, around 50 borrowers burst from the audience and presented Lowman with a 6-page document alleging his bank reneged on a pledge to help struggling homeowners.
The activist who organized the protest said Lowman did not want to talk and left the hearing.
"He ran. He ran like a dog with its tail between his legs," said Bruce Marks of the Neighborhood Assistance Corporation of America (NACA), which helps homeowners avoid foreclosure. "He was scared to death because he doesn't really want to talk to homeowners."
The incident is symptomatic of frustrations among U.S. homeowners as defaults and foreclosure filings dominate the housing sector more than three years after the property bubble began to deflate.
NACA organizes events where borrowers try to get loan modifications with lenders. The group says JPMorgan signed up to the NACA program but dropped out in December.
A JPMorgan spokesman declined to comment on the complaint."
#3 Posted by Thimbles, CJR on Wed 14 Apr 2010 at 02:15 PM