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:
Deposits: $16.3 billion*
Branch offices: 291
Employee wages/benefits: $1.4 billion
Charitable donations: $4.8 million
Deposits (Franklin County): $5.7 billion*
Branch offices: 63**
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…
Most of the account maintenance jobs will be shifted to centers in San Antonio; Columbus, Ohio; and Houston, Hassell said.
But, what a surprise, Albion, New York, is keeping its 800 call-center jobs. See if you can guess why:
The future of JPMorgan Chase & Co.’s 800-job call center in Albion has been a source of worry amid a financial crisis that roiled the economy and eliminated jobs.
But Sen. Charles E. Schumer said the company has assured him the center will remain open “for the long term” and called the decision “a huge victory for the Finger Lakes and Western New York…”
You know, Chuck Schumer, powerful member of the Senate Finance Committee and long-time defender of Wall Street interests. Think he had something to do with that?
Schumer, a Democrat who serves on the Senate Banking Committee, met last February with Jamie Dimon, JPMorgan’s chief executive officer, to urge the company to make a long-term commitment to the center.
Wink wink. Just a couple of examples of how the too-big-to-fail boys throw their weight around.
That Jamie Dimon, he’s a savvy political guy. No wonder there was (incredibly) talk of making him Treasury Secretary.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at firstname.lastname@example.org. Follow him on Twitter at @ryanchittum.