Archive for January 21st, 2011
JP Morgan is the largest processor of food stamp benefits in the United States. JP Morgan has contracted to provide food stamp debit cards in 26 U.S. states and the District of Columbia. JP Morgan is paid for each case that it handles, so that means that the more Americans that go on food stamps, the more profits JP Morgan makes. Yes, you read that correctly. When the number of Americans on food stamps goes up, JP Morgan makes more money. In the video posted below, JP Morgan executive Christopher Paton admits that this is “a very important business to JP Morgan” and that it is doing very well. Considering the fact that the number of Americans on food stamps has exploded from 26 million in 2007 to 43 million today, one can only imagine how much JP Morgan’s profits in this area have soared. But doesn’t this give JP Morgan an incentive to keep the number of Americans enrolled in the food stamp program as high as possible?
There are just some things that are a little too “creepy” to be “outsourced” to private corporations. The JP Morgan executive in the interview below does his best to put a positive spin on all this, but it just seems really unsavory for a big Wall Street bank to be making so much money off of the suffering of tens of millions of Americans….
So if unemployment goes down will this ruin JP Morgan’s food stamp business?
Well, apparently not. In the interview Paton says that 40% of food stamp recipients are currently working, and he seems convinced that there could be further “growth” in that segment.
So is this what America is turning into?
A place where tens of millions of the unemployed and the working poor crawl over to Wal-Mart and the dollar store every month to use the food stamp debit cards provided to them by JP Morgan?
It turns out that JP Morgan also provides child support debit cards in 15 U.S. states and they also provide unemployment insurance benefit debit cards in seven states.
Apparently states have found that they can save millions of dollars by “outsourcing” the provision of these benefits to big financial firms like JP Morgan.
So what happens if you have a problem with your food stamp debit card?
Well, you call up a JP Morgan service center. When you do this, there is a very good chance that you are going to be helped by a JP Morgan call center employee in India.
That’s right – it turns out that JP Morgan is saving money by “outsourcing” food stamp customer service calls to India.
When ABC News asked JP Morgan about this, the company would not tell ABC News which states have customer service calls sent to India and which states have them handled inside the United States….
JP Morgan is the only one today still operating public-assistance call centers overseas. The company refused to say which states had calls routed to India and which ones had calls stay domestically. That decision, the company said, was often left up to the individual states.
JP Morgan has been moving some of these call center jobs back inside the United States due to political pressure, but this whole situation is a really good example of what the “global economy” is doing to middle class Americans.
Just try to imagine the irony – a formerly middle class American that has lost a job to outsourcing calls up to get help with food stamp benefits only to be answered by a call center employee in India.
Welcome to the global economy, eh?
But wait, there is more.
It has just been announced that JP Morgan has admitted that they wrongly foreclosed on over a dozen military families and that they have been overcharging “thousands” of other military families on their mortgages.
It is a really bad public relations move to mess with military families.
Is anyone over at JP Morgan even paying attention?
JP Morgan has also been one of the primary financial institutions involved in the foreclosure “robo-signing” scandal.
They just seem to be having all kinds of problems lately. But they are not alone.
The truth is that we have gotten to the point where big Wall Street banks such as JP Morgan, Goldman Sachs, Citibank and Morgan Stanley just have way, way too much power.
The biggest Wall Street financial institutions had no trouble begging for bailouts from the U.S. government during the financial crisis, but when the American people have needed a little grace and mercy from them they have been less than helpful.
So what do you think about how the big Wall Street banks have been behaving? Join the conversation here: DISCUSSION (registration required to post)
How the financial elite have dismantled the American middle class – top 1 percent share of wealth at levels not seen since the Great Depression. Goldman Sachs offering average bonuses of $430,000 while a record 43,200,000 Americans receive food stamps.
The U.S. economy is now operating like a finely tuned engine bent on dismantling the middle class and protecting the tiny elites in our nation that have learned to manipulate both political parties to their financial benefit. This did not occur over night but started in the 1970s when the U.S. government and investment banks juiced up the nation with deficit and debt spending. A single family cannot go into debt for a very long time without consequences but a rising housing market hid much of the inequality developing in our system for a very long time. It was an illusion of stability. The top 1 percent in our nation now control 43 percent of all financial wealth. These are levels not seen since the years before the Great Depression consumed the global economy. The fact of the matter is the top 1 percent has massively gained in real financial terms because of political maneuvering and selling out the middle class. Since these people protect their wealth through investment banks and tax breaks politicians have not dared touch these sacred cows or even asking banks to pay for their decades of personal irresponsible lending. In the end the elite have created a system where the working and middle class are paying for their own demise.
“(UK Guardian) A homeless encampment known as Tent City, in Sacramento, California, in 2009. Since the 1970s, real wages stopped growing and the gap between rich and poor expanded as the US economy slowed down after decades of growth. Photograph: Rich Pedroncelli/AP”
I find it disturbing that foreign news organizations are covering our financial reality better than local media outlets. This probably has to do with many large media outlets being controlled by the same Wall Street power brokers. This is no conspiracy story but a logical extension of money infiltrating and controlling politics, laws, and the trajectory of our economy moving forward. The above comes from the UK and shows a grim reality that many Americans do not want to face. Those that do face it are usually left voiceless (ironically the viral star Ted Williams was a homeless man with a golden voice). We have a very large problem with many people falling off of the economic radar. Tent cities are now a staple in many areas of the country and food banks are facing unprecedented demand for their services. Why is this occurring in the midst of a recovery? Well take a look at how many people now receive food assistance from the government:
The latest uninviting data shows 43,200,000 Americans receiving some form assistance, an all-time record that seems to be broken each month. This number has been moving up steadily for the entire decade. Many of these people are families that have been thrown off of the middle class track. With 1 out of 3 families with no retirement savings many people are one paycheck away from being homeless or being evicted, a fact confirmed by the record number of foreclosures in 2010. What is disturbing however is how many people are anesthetized by the mainstream media and somehow blame each other for these problems. Have they not noticed the record profits at investment banks? Did they miss the memo that Goldman Sachs, a bank that would not even be around without taxpayer support, is now going to give out bonuses that average $430,000? Did people forget that it took Wall Street years to create these financially destructive products to gamble away the wealth of average Americans and distribute it amongst themselves? While most working and middle class Americans operate in the rugged individualistic capitalism world of Social Darwinism many of the elite operate in a plutocracy model where they win no matter what outcome hits in the market. If they make a failed bet they can extort politicians and force their hands for bailouts.
“US employers took advantage of the changed situation: they stopped raising wages. When basic labour scarcity became labour excess, not only real wages, but eventually benefits, too, would stop rising. Over the last 30 years, the vast majority of US workers have, in fact, gotten poorer, when you sum up flat real wages, reduced benefits (pensions, medical insurance, etc), reduced public services and raised tax burdens. In economic terms, American “exceptionalism” began to die in the 1970s.”
The disparity is obvious by examining the above chart. Income is now flowing to the top 10 percent in a way that it has not since the 1920s all the while middle class American have been increasing productivity and have actually added more family members to the workforce merely to stay afloat. Half of all American workers make $25,000 a year or less. Wages have been stuck for over a decade and have gone virtually nowhere for a few decades in real terms. Yet these gains in productivity and favorable political climate have flowed one way:
“The rich, however, have got much richer since the 1970s, as every measure of US income and wealth inequality attests. The explanation is simple: while workers’ average real wages stayed flat, their productivity rose (the goods and services that an average hour’s labour provided to employers). More and better machines (including computers), better education, and harder and faster labour effort raised productivity since the 1970s. While workers delivered more and more value to employers, those employers paid workers no more. The employers reaped all the benefits of rising productivity: rising profits, rising salaries and bonuses to managers, rising dividends to shareholders, and rising payments to the professionals who serve employers (lawyers, architects, consultants, etc).”
So even with the top 10 percent we see the inequality spike as we move up the chain. The narrative coming out of Wall Street is all of this was inevitable. That somehow the middle class disappearing is just the market working itself out. That is a blatant lie. If that were to be the case all big investment banks on Wall Street would be in the ash heap of history. That would be the market working things out. Instead, we have subsidized cronyism for the top 1 percent all at the expense of the working and middle class:
“Since the 1970s, most US workers postponed facing up to what capitalism had come to mean for them. They sent more family members to do more hours of paid labour, and they borrowed huge amounts. By exhausting themselves, stressing family life to the breaking point in many households, and by taking on unsustainable levels of debt, the US working class delayed the end of American exceptionalism – until the global crisis hit in 2007. By then, their buying power could no longer grow: rising unemployment kept wages flat, no more hours of work, nor more borrowing, were possible. Reckoning time had arrived. A US capitalism built on expanding mass consumption lost its foundation.”
Average Americans need to wake up and get a handle on the situation. College tuition now is even outpacing inflation compared to other sectors so it is likely that fewer Americans will gain the knowledge base needed to combat these entrenched interests without going into massive debt at these institutions. Many would rather be fixated on a homeless man with a golden voice instead of looking at where all the real gold is in our economy.
DISCUSSION (registration required to post)
Fourth-Quarter Net Loss of $1.2 Billion, or $0.16 per Diluted Share, Includes Goodwill Impairment Charge of $2.0 Billion
Excluding Goodwill Impairment Charge, Fourth-Quarter Net Income Was $756 Million, or $0.04 per Diluted Share1
2010 Net Loss of $2.2 Billion, or $0.37 per Diluted Share, Includes Goodwill Impairment Charges of $12.4 Billion
Excluding Goodwill Impairment Charges, 2010 Net Income Was $10.2 Billion, or $0.86 per Diluted Share1
Ya, ok. Goodwill impairment charges eh? You mean writing off worthless “goodwill” – one of the best scams out there in the accounting world, by the way – the “value” you pay in excess of actual value, otherwise known as “speculative premium” or “that other bastard got us to overpay for that acquisition” (but never called that) is being written down pretty aggressively.
That is known among honest people as “we’re never going to recognize anything of value from that, and the auditors won’t let us get away with it any more.”
Oh yeah, Revs missed too.
Why? Well the bank blames…..
The revenue decline was driven by the impact of Regulation E (Reg E), which was effective in the third quarter of 2010 and the overdraft policy changes implemented in the fourth quarter of 2009.
Oh, you mean the “we’ll steal everything that isn’t nailed down that our customers might have had” policy that got short-cut to some degree by The Fed and Congress? Uh, yeah. Overdraft “policy.” Like stacking transactions to generate the largest overdraft charge possible, right?
I’m impressed that BAC managed to actually increase deposits by 1%. There are actually people who still do business with this institution? Certainly you jest….. oh wait, you’re not kidding. Ok, the American people really are stupid.
Oh yeah, they’re claiming credit improvement which means lower reserves – except for putbacks and litigation expense, which, well…… This is really quite funny – all the banks are doing this, and some are cranking open the credit card available line numbers again. This is nothing short of amazing, given the leverage picture on balance in the economy and the lack of employment improvement. Indeed, the only place we’ve seen any sort of “balance sheet fixing” among consumers is in credit cards – everywhere else it’s been terrible, and the “expansion” has all been in student loans, which are now Federal things.
Finally, go through their voluminous (and what looks to be intentionally obscure) releases and pay particular attention to their available cash and cash equivalents…… and what has happened to them this last quarter….. then ask yourself – where did it go?
No matter how you slice and dice it, an 11% revenue decline is a monstrous miss, and a loss compared to analyst expectations of 14 cents in earnings? Well that’s a chocolate bar in the punchbowl too.
Again, the bottom line for any business is “show me how you make money.” When the answer is “we find ways to screw customers” I’m not interested – eventually those games blow up in your face, and neither I or anyone else is good enough to know exactly when it will happen.