What Dimon did not say, however, was that JPMorgan Chase continues to get loads of free government money -- probably $14 billion per year, according to number-crunching by Bloomberg, based on an International Monetary Fund study. Bloomberg's editors write:
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.Fourteen billion dollars? That's a lot of cufflinks! The number is based on an IMF estimate of the benefit JPMorgan gets in the bond market from the assumption that the government will make JPMorgan's creditors whole in the event of another financial catastrophe.
The IMF figures that big banks pay about 0.8 percentage points less in interest to borrow, compared with ordinary mortal banks that have the misfortune of not being too big to fail.
That lower interest rate translates into about $76 billion per year for the 18 biggest U.S. banks, Bloomberg writes, of which JPMorgan's share is $14 billion. Fun fact: That $76 billion is more than enough to pay for the $30 billion in extended unemployment benefits that are set to expire at the end of the year. But who's counting? Aside from the unemployed, I mean?
This figure does not include the $12 billion windfall JPMorgan and other big banks are expected to get from the government's HARP refinancing program -- which, again, JPMorgan is only taking advantage of for the good of the country.
This subsidy is one good reason (of many) why people should maybe care -- this is the taxpayer's money they're gambling with.Source HuffPost