A note on Chase’s pledge to invest $100 million in Detroit
OK: $100 million is nothing to sneeze at.
If case you haven’t heard — which, we suppose that means anyone who doesn’t live in metro Detroit or watch NBC’s Today Show — JPMorgan Chase has pledged to invest the nicely round sum of $100 million in Detroit. If you want to understand what that entails see here here or here.
To emphasize just how committed the financial institution was, Jamie Dimon, CEO of The Nation’s Largest Bank, was interviewed by Matt Lauer of the Today Show this morning to discuss the pledge.
“…I think we could make this could be our finest moment,” Dimon said. “Can Americans come together with business, labor and city leaders to fix the city? We’ve seen the rebirth of cities all over America. It would be an unbelievable thing if we can see a rebirth here.”
Again: That’s fine.
Lauer, acting as a reporter of sorts, pressed Dimon for a hard-nosed reply, saying: A cynic might look at you, Jamie, and say this is a $100 million PR campaign. Would that cynic be wrong?”
Dimon, a comedian of sorts, replies: “Yeah, that cynic would be wrong because we invest and develop communities around the world. … So that’s what banks do. They do it commercially. They do community development.”
Call us wrong, then, because all Dimon basically needed to affirm the interview as a giant PR stunt was to appear in full clown makeup. (And yeah, of course, banks loan money to people.)
I mean, really. You announced your $100 million pledge — that is, The Nation’s Largest Bank committing $20 million a year for five years – in an interview with Matt Lauer on the Today Show. It is a PR stunt, one you hope to make money off of, as the Freep notes today. Hello? Is this thing on?
In case we need a reminder of what banks, such as JPMorgan Chase, have done, here’s Matt Taibbi on that precious $13 billion settlement that sent a grand total of zero people to jail.
Papers like the Journal have particularly complained that Chase should not be held responsible for the offenses committed by companies long before Chase acquired them. What they forget is that Chase has made a fortune off its acquisitions of Bear and Washington Mutual, two purchases which were massively subsidized by the state. Nobody complained about potential liability back when all those two deals were doing for Chase was helping its executives buy overpriced art and summer homes.
And remember, this sort of liability was basically the only risk Chase took in these deals. The government took on most of the rest, in order to make the acquisitions happen.
Chase got to buy Bear Stearns with $29 billion in Fed guarantees, with the state setting up a special bailout facility, Maiden Lane, to unwind all of the phony-baloney loans created through Bear’s Ponzi-mortgage-mechanism described above. So Chase got to acquire one of the world’s biggest investment banks for pennies on the dollar, and then got the Fed to buy up all the toxic parts of the bank’s portfolio, essentially making the public the involuntary customer of Bear’s criminal inventory.
Later on, Chase took $25 billion in TARP money, bought Washington Mutual and its $33 billion in assets for the fire-sale price of $1.9 billion, and then repeated the Bear scenario, getting another Maiden Lane facility to take on the deadliest parts of Washington Mutual’s portfolio (including, for instance, a pool of mortgages in which 94 percent of the loans had limited documentation).
Pareene hilariously told the CNBC panel that anybody could do Jamie Dimon’s job as badly as he’s done it, offered himself in half-seriousness as an option and made the absolutely accurate point that any other boss in any other industry who had overseen the regulatory problems that took place at Chase under Dimon would be looking for work.
“If you managed a restaurant, and it got the biggest health department fine in the history of restaurants,” Pareene said sensibly, “no one would say ‘Yeah, but the restaurant’s making a lot of money. There’s only a little bit of poison in the food.’”
Let’s be utterly clear: Where Chase plans to put the money — $50 million into Invest Detroit and Capital Impact Partners for development projects, $25 million in blight-removal efforts (!) and more — comes at a time when Detroit needs investment and capital.
It just would’ve been nice to see it done without the fawning fanfare – such as, say, how a non-PR stunt would’ve looked.