77% of JP Morgan’s Net Income Comes from Government Subsidies

JP Morgan Sucks at the Government Teat

JP Morgan’s credit rating would be much lower without government backing.

As Bloomberg noted last week:

JPMorgan benefited from the assumption that there’s a “very high likelihood” the U.S. government would back the bank’s bondholders and creditors if it defaulted on its debt, according to the statement. Without the implied federal backing, JPMorgan’s long-term deposit rating would have been three levels lower and its senior debt would have dropped two more steps, Moody’s said.

And as the editors of Bloomberg pointed out a couple of weeks ago:

JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fundand our own analysis of bank balance sheets. 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.

***

With each new banking crisis, the value of the implicit subsidy grows. In a recent paper, two economists — Kenichi Ueda of the IMF and Beatrice Weder Di Mauro of the University of Mainz — estimated that as of 2009 the expectation of government support was shaving about 0.8 percentage point off large banks’ borrowing costs. That’s up from 0.6 percentage point in 2007, before the financial crisis prompted a global round of bank bailouts.

To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education.

JPMorgan’s share of the subsidy is $14 billion a year, or about 77 percent of its net income for the past four quarters. In other words, U.S. taxpayers helped foot the bill for the multibillion-dollar trading loss that is the focus of today’s hearing. They’ve also provided more direct support: Dimon noted in a recent conference call that the Home Affordable Refinancing Program, which allows banks to generate income by modifying government-guaranteed mortgages, made a significant contribution to JPMorgan’s earnings in the first three months of 2012.

Way to suck at the government teat, Mr. self-proclaimed free market champion.

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  • gozounlimited

    Just For Contrast ….. Main Street Subsidizing Main Street ….. People Loving People …..

    21 Pictures That Will Restore Your Faith In Humanity

    (BuzzFeed) – People aren’t always awful. Sometimes, they’re maybe even just a little bit wonderful. Here are 21 pictures to remind you of that fact. …… see video: http://dprogram.net/2012/06/30/21-pictures-that-will-restore-your-faith-in-humanity/#more-111253
    ***********
    “Liberty has never come from Government. Liberty has always come from the subjects of it… The history of liberty is a history of limitations of governmental power, not the increase of it.” (Henry Louis Mencken)

    How to Control The World – Max Igan ….. see video: http://dprogram.net/2012/06/30/how-to-control-the-world-max-igan/
    ***********
    吉田美奈子 「Liberty」 …….Someday we will free our souls with LOVE…. see video: http://www.youtube.com/watch?v=yTqI7aQLPOQ

    • gozounlimited

      “The criminals must be charged and convicted whether in Barclays or other banks, brokers or hedge funds.”

      Banking scandal: how document trail reveals global scam

      It’s not a comfortable weekend for the men heading some of the world’s biggest banks. Barclays has already been hit by a £290m fine for rigging interest rates but that could be dwarfed by a series of global lawsuits which could cost banks billions.

      read more: http://www.guardian.co.uk/business/2012/jun/30/banking-scandal-barclays-lawsuits-libor
      ***********

      Barclays’ chairman resigns

      ITV News has learnt that the chairman of Barclays Bank will be stepping down, as the row intensified over the Libor rate-fixing scandal.

      read more: http://www.itv.com/news/story/2012-06-29/misery-for-britains-banks/
      ***********

      Let’s end this rotten culture that only rewards rogues

      The Barclays rate-rigging scandal has once again exposed a world where men and women with little skill and no moral compass can become very rich very fast

      Investment banking is an organised scam masquerading as a business. It is defined by endemic conflicts of interest, systemic amoral behaviour and extreme avarice. Many of its senior figures should be serving prison sentences or disgraced – and would have been if British regulators had been weaned off the doctrine of ” light touch” regulation earlier and if the Serious Fraud Office’s budget had not been emasculated by Mr Osborne. It is a tax on wealth generation and an enemy of honest endeavour – the beast that is devouring British capitalism.

      read more: http://www.guardian.co.uk/commentisfree/2012/jun/30/will-hutton-barclays-banking-reform

  • http://rehmat1.com/ Rehmat

    Mikis Theodorakis, is considered a hero in Greece. He wrote the music for the film “Zorba the Greek”. He claimed in the interview he gave to Greece’s High channel that “everything (bad) that happens today in the world has to do with the Zionists.” He added that “American Jews are behind the world economic crisis that has hit Greece also.”

    http://rehmat1.com/2011/04/09/theodorakis-i-am-anti-zionist/

  • smokey18

    They steal your money when you use your money. They steal your money when you dont have enough money. They tell you your only paying 3-4% intrest on your MORTGAGE, but in reallity its 80% by the time the loan is paid in full. How in HELL is it, the BANKS NEED A BAILOUT , when for every house they loan you money for , they get back 1.8 times the money loaned. Every 100 thousand $$$, they get back 180 thousand $$$$. I heard all the CEO of all the banks had to get new asses because the old ones had holes in them. ASSHOLES.

    • jantz

      how in hell is it that the victims never fight back against all of this? despite the fact that they are well aware its going on..?

  • suezz

    totally agree smokey18. its a goldman sachs 4th of july.
    really the constitution is dead and is just a museum piece.
    why even have it anymore.

    I have been promoted in my job and yet I make less than i did in the 1990′s because of inflation.
    when a sandwich goes from 1.75 to 2.25 in one day and I pay 10% tax on that sandwich is just basically highway robbery. these greedy bankers just don’t want 3 to 5 percent on their investments they want 15 to 20 percent. you end up paying double or triple the price of your house when it is all paid for in the end which is ridiculous. what are they doing with the money? that isn’t enough for them now they want to go after you taxes as another income source. pretty soon there will be no income tax for them to get because all the jobs are going to India, Slovakia, China and any other country the can find underneath their rock.

 

 

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