Jamie Dimon, welfare recipient
JPMorgan Chase receives billions in government subsidies each year. The money helps keep the bank afloat, at the risk of sinking the economy.6/19/2012 4:29 PM ET
When JPMorgan Chase (JPM +3.33%, news) CEO Jamie Dimon testified in the U.S. House today, he presented himself as a champion of free-market capitalism in opposition to an overweening government. His position would be more convincing if his bank weren't such a beneficiary of corporate welfare.
To be precise, JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and 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.
How can all this be? Let's take it step by step.
In recent decades, governments and central banks around the world have developed a consistent pattern of behavior when trouble strikes banks that are large or interconnected enough to threaten the broader economy: They step in to ensure that all the bank's creditors, not just depositors, are paid in full. Although typically necessary to prevent permanent economic damage, such bailouts encourage a reckless confidence among creditors. They assume the government will always make them whole, so they become willing to lend at lower rates, particularly to systemically important banks.
More: http://money.msn.com/investing/jamie-dimon-welfare-recipient-bloomberg.aspx
hrmjustin
(71,265 posts)the gop will always look the other way.
truedelphi
(32,324 posts)Last edited Wed Jun 20, 2012, 09:24 PM - Edit history (1)
whoa re his friends in Congress, he wears the pair of cuff links his Good Buddy Mr Obama gave him, complete with the Presidential Seal on it.
Why do I keep feeling like the message I am getting is that we the electorate no longer matter at all?
hrmjustin
(71,265 posts)msongs
(67,476 posts)Igel
(35,383 posts)It's a subsidy that involves no transfer of money.
It's one step beyond having your student loans guaranteed by the feds; it's a guarantee that if you would default on your loans, the government will loan you money (at interest) so you can continue to make payments to your creditor. The analogy is inexact because in most cases JPM wouldn't actually need to make the payment to the creditor, just repay the loan to the government (with interest).
But the original source called it an "implicit subsidy," the secondary source didn't insist on using the word "implicit" each and every time, so of course a tertiary source won't even be aware that the subsidy was implicit.
Telephone.
In a couple of iterations the "subsidy" will probably be interpreted to mean actual annual cash payments to JPM.