JP Morgan Chase Takes $14 Billion Each Year In Government Subsidies

JP Morgan Chase executives tried to paint themselves and the bank as oppressed by strict government controls at congressional hearings this week, but the truth is that the bank is reliant on the government to the tune of $14 billion per year.

An analysis by Bloomberg found that JP Morgan Chase accepts money in the bond market on the assumption that the government will pay off the bank’s creditors in case of another financial collapse. This step ensures that all creditors, not just depositors, are paid in full, Bloomberg reported.

One side effect of this subsidy is an over-abundance of credit from banks, Bloomberg reported. That has led to risky behavior like people buying home they can’t afford and household debt rising to $38.6 trillion, more than twice the country’s entire gross domestic product.

As the Huffington Post points out, this government subsidy is ultimately the same pool that JP Morgan Chase and other banks use to pay out salaries and bonuses, which have come under fire for continuing even as banks had to take bailout money to keep from folding. The $14 billion figure also does not include the $12 billion that JP Morgan Chase and other big banks will be getting from a government refinancing program, the report said.

The bank and its CEO Jamie Dimon have been under fire recently after it was revealed that JP Morgan Chase lost $2 billion in risking trading, apparently not learning its lesson from the behavior that originally kick-started the recession. In hearings on Capitol Hill, Dimon told the Senate Banking Committee that he was aware of the trading strategy being used but did not approve of it, the Los Angeles Times reported. Dimon even downplayed the trading and losses in an April telephone conference with investors, calling it a “tempest in a teapot.”

“On April 13, I believed it was a tempest in a teapot,” the JP Morgan Chase executive said. “I obviously was dead wrong, and I deeply regret having said it.”