The following article is brought to you by John Crudele at NYPost.Com
Dear John: It seems we have underestimated the amount that Jamie Dimon has cost shareholders. JPMorgan Chase has been assessed an additional $680 million-plus in fines — most of that for the so-called “whale trade” in London but also $80 million for identity theft by the bank’s credit card group.
If you add it all up, Jamie has cost shareholders $28.2B in five years, which seems about equal to the total full-year profits for 2012. All the profits last year were [frittered] away.
There are profound implications of all this to shareholders, you and me — the taxpayers/business owners whom no one seems to be talking about.
One, JPMorgan needs to replenish this $28 billion for capital requirements required by the Basel rules.
Two, the bank now has $28 billion less to generate earnings — not just for 2013, but forever.
Three, since JPMorgan can take a tax deduction for all of this, that translates into $7 billion in lost IRS tax revenue, using the 25 percent tax rate.
Four, this means J.P. Morgan has much less to lend to small businesses to help reignite the economy.
Five, the Federal Reserve is actually financing this $28 billion, since JPMorgan can borrow from the Fed’s window to pay out these fines.
There has not been one clawback of anyone’s bonus, and from what was reported, last year’s bonuses were crazy-good. And it seems the word on the Street is, 2013 bonuses will be the same crazy-good.
I am baffled that not one large shareholder has questioned all this.