Press favorite Jamie Dimon’s JPMorgan Chase is paying $110 million to settle a class-action suit against it for gouging its customers on overdraft transactions. The bank, like many others, artificially re-ordered transactions to clear from highest to lowest in order to trigger more overdrafts.
Obviously, $110 million is a lot of money in almost contexts—even for investors of a bank that’s way too big to fail. But it’s apparently not enough to trigger much press coverage. The Wall Street Journal skips it in print, as does The New York Times. Both relegate the news to brief posts on their websites. The Associated Press gives it less than 150 words. Bloomberg News is better, as is Reuters, but none of them ask the obvious question: How does this $110 million penalty compare to what Chase made fleecing its customers?
For that, we turn to American Banker‘s Jeff Horwitz, who broke the story last Friday, which makes it even stranger that there’s this hole in the follows:
The bank generated $500 million a year in post-tax income from high-to-low re-sequencing, according to Chase’s own analysis…
Chase’s proposed settlement appears relatively favorable to the bank, given that the $110 offered is just 22% of its alleged earnings from wrongful overdraft fees.
It’s worth admiring the journalistic thinking here that results in these two sentences, particularly the one I’ve highlighted. Remember that American Banker is a trade publication. Those are by their nature more dependent than, say, the WSJ or Reuters on access and on the people and companies they’re covering. That makes it less likely that you’ll see this kind of stuff in a trade, but as we’ve shown, we get it all the time from the Banker.
The Huffington Post’s Catherine New is good to pick up on this angle. Her post is headlined “Overdraft Settlements Cost Banks A Small Fraction Of What’s Netted In Fees,” and she credits the Banker. But you’ll strain to find these numbers elsewhere in the press.
Which is a shame. The lesson to take away from this story is that it pays to gouge your customers. And so in this context, at least, $110 million is not a lot of money. It’s a fraction of how much consumers, who skew poorer (the poorest 10 percent pay 40 percent of all overdraft fees, according to one study), got gouged. It’s an awfully small price for bankers to pay for hundreds of millions of dollars in profit a year.
Until you see banks and bankers forced to disgorge all ill-gotten profits, plus some, these nine-figure settlements will continue to be so commonplace that the mainstream press can all but ignore them.
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 rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.