Wednesday, 10 August 2016

Societal Worth of US Big Banks Part II Beyond Advertising

Actions Speak Louder Than Words, At Least That's What Some Folks Say

In a previous post, I noted the advertising campaign that major US banks had launched to rebut no doubt unfair characterization of them as “reckless” and “too big”.

Ads are fine but sometimes the most compelling argument is how you live your life or conduct your everyday business.
Turning back to the Grey Lady’s coverage of this story, a quote from Jamie Dimon of JP Morgan Chase pictured above, doing his best for humanity, sets the stage.
“When Mr. Dimon was asked in February how he would explain to an analyst’s mother-in-law the benefit of being a large bank, he conceded, “We have a hard time explaining those things to the public.”
Mr. Dimon went on to say: “We make loans. We help companies. We help communities. We are the Rock of Gibraltar in the tough times.”    
In just a few powerful words, he’s made the case for the big banks. 

The central justifying theme is “helping”.  Or "doing one's best for humanity" as in an interview with Fox News 13 January 2015 which you can watch here. 
Of course, banks also have a duty to make an honest profit for their shareholders. 
As Krimes v. JPMorgan Chase Bank NA, 2:15-cv-05087, U.S. District Court, Eastern District of Pennsylvania (Philadelphia) no doubt shows there doesn’t have to be a conflict between an "honest" profit and "doing one's best for humanity" or "helping communities".
In 2008 JP Morgan won a no-bid contract to provide ex- convicts from all Federal prisons in the US prepaid debit cards which they could use to withdraw money they had earned in prison or money that had been sent to them while they were incarcerated.
According to Fortune magazine,
“But when the convicts were freed and tried to access their money, they found that they had to pay huge fees for what seemed like ordinary services.
The former prisoners had to pay $24.50 if they wanted to get a lost card replaced quickly; $10 to withdraw money at a teller window; and $1.50 if they didn’t use the account for a month, according to the Financial Times. They even had to pay $0.45—or the equivalent of two hours of work in prison, the FT notes—if they wanted to check their account balances.”
AA side comment: $0.45 doesn't sound like much until you scale the fees to the convicts' wages per hour to get an idea of the relative cost of the service.
Bloomberg quoting an unnamed ex prisoner:
“I left prison with $120,” an unidentified former inmate said in the complaint. “Because of the fees, I was only able to use about $70 of it.” 
Success in achieving goals is a function of attitude and aptitude so they tell AA. 
Perhaps, encouragement to "try harder" would be in order as AA is confident in the presence of aptitude at JPMC.

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