Mr Dimon Goes To Washington

The Wall Street Journal reports that J.P. Morgan Chase CEO Jaime Dimon is roaming the corridors of our nation's Capitol, beating the drum for Sound Banking.

As Congress prepares to push finance regulation to the front burner, plenty of bank executives—stung by Washington's Wall Street bashing—are keeping a low profile.

James ("Jaime") Dimon, chairman and chief executive of J.P. Morgan Chase & Co., isn't one of them. Buoyed by J.P. Morgan's relative good health, he's spent the past year launching his own campaign to stave off government proposals that would rein in profits, boost consumer protections and impose new fees.

Mr. Dimon's bank shelled out more for lobbying efforts last year—$6.2 million—than any of its peers, and the CEO has lately been a regular presence in the halls of Congress. He preaches about how new regulations could force J.P. Morgan to further crimp credit-card lending and raise fees for consumers. One move aimed at banks he's characterized as "un-American."

In a related piece of news—well, I thought the two stories fit together very nicely—there are almost 40 million Americans who don't need Jaime's credit cards and won't be paying his fees. 39,430,724, to be exact. 

This is the number of people currently receiving Supplemental Nutritional Assistance according to the Department of Agriculture. This assistance is otherwise known as food stamps. This number has been climbing at a very rapid pace in 21st century America.

What does it mean to be Middle Class in 2010? – No College Degree, Massive Amounts of Debt, One Health Crisis from Bankruptcy, and Beholden to the Banking Elite

Mr. Dimon has a problem. The Middle Class is shrinking. Many more people require assistance.  Food stamp recipients don't need his services. With his prey customer base getting smaller, banking reform will just make things worse for the predator J. P. Morgan Chase.

In a recent interview on the 48th floor of J.P. Morgan's newly redone minimalist Park Avenue headquarters, Mr. Dimon showed little sign of backing down. "The incessant broad-based vilification of the banking industry isn't fair and it is damaging," Mr. Dimon said. "Punishing whole industries, whether you were reckless or not, just isn't the way to do things."

A number of political insiders say they've grown weary of Mr. Dimon's protestations, viewing him as just another elite New York banker out to protect his turf. Some note that the bank profited handsomely during the financial crisis, when it scooped up securities firm Bear Stearns Cos. Inc. and Washington Mutual Inc.'s failed banking operations at bargain prices.

Rep. Brad Sherman, a California Democrat and senior member of the House Financial Services Committee, said J.P. Morgan benefits from its "ability to create awe and fear and a belief that the world will end if they are not pampered"...

J.P. Morgan, which earned $11.73 billion last year, estimates that the credit-card law enacted in February will cost as much as $750 million annually in lost revenue and implementation costs. The bank also stands to lose $500 million from new restrictions on checking-account overdraft fees...

Jaime (left) and Food Stamps Shopper (right)

Here's the recent food stamp data for American households from Mish—

Food Stamp Program Household Participation

FY 2005 - 11,197,377
FY 2006 - 11,734,491
FY 2007 - 11,789,594
FY 2008 - 12,728,981
FY 2009 - 15,232,105

Looking at this recent rate of increase in those "participating" in the supplemental nutrition program, combined with the staggering historical increase we see in the graph above, it's easy to imagine that there might not be any Middle Class people left at some point in the future. And then who will Jaime lend money to at usurious rates of interest? The poor don't need his credit credit cards and checking accounts, with their hefty overdraft penalties. The rich certainly don't need them.

So J.P. Morgan Chase is caught in a Big Squeeze. Someday there might not be anybody left to rip off just as Congress "considers" reining in his business. For Jaime, this growing problem must be very troubling indeed. I'll bet he's not sleeping well. No wonder he's pounding the pavement up on Capitol Hill.

Comments

[eman]

Dave,

Jamie is one step ahead of you. With the middle class on the ropes he has already gotten into the debit card business for - can you believe this - the food stamp programs!

http://www.jpmorgan.com/tss/General/J_P_Morgan_Helps_Deliver_Early_Food_Stamps_Benefits_to_/1159375798116

http://jischinger.wordpress.com/2010/01/11/jpmorgan-bets-on-food-stamps/

"Florida isn't the only state to use JPMorgan to handle its food stamp benefits administration; Spann said JPMorgan uses a Tampa-based center to run food stamp programs for a total of 28 states."

From: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5481294

(It is hard to find a lot of info on this online -- I wonder why?)

Apparently as these middle class folk drop back into poverty Mr. Dimon will still profit!