The J.P. Morgan Chase Watch
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Updated May 5, 2008 Click here for Inner City Press front page Click here for media reports
For some previously coverage, see, e.g., "Chase - Bank One Merger Review Airs Dirty Laundry," by Russ Wiles, Arizona Republic, June 27, 2004, Pg. 4D; "Merger Menace: A David Takes on Banking Goliaths," by David Weidner, CBS.MarketWatch and AFX.com, April 23, 2004; "J.P. Morgan Makes $800 Billion Pledge," by Jennifer Harmon, National Mortgage News, April 19, 2004, Pg. 2; "Critics Voice Concerns on Takeover of Bank One," by Leon Lazaroff, Chicago Tribune, April 16, 2004; "Banks Make $800 Billion Promise: Bank One, J.P. Morgan Chase unveil community aid; merger hearings start," by Ken Stammen, Columbus Dispatch, April 16. 2004; "JPM Chase Makes CRA Pledge; Faces Merger Scrutiny," by Liz Moyer, American Banker, April 16, 2004, Pg. 18; "JP Morgan, Bank One To Help Poor Communities," Associated Press, April 15, 2004; "Fed Urged to Block JP Morgan/Bank One Merger," by Victoria Thieberger, Reuters, April 15, 2004; "Group Opposes Bank One Sale: Business with Predatory Lenders a Concern," by Ken Stammen, Columbus (Ohio) Dispatch, April 15, 2004; "J.P. Morgan Merger Slammed," by Nancy Dillon, New York Daily News, February 24, 2004, Pg. 67; "Grievance Against JPM / Bank One Deal," American Banker, January 23, 2004, Pg. 3; "Consumer Group Protests Bank Deal; Cites concerns for minority and low-income customers," by Kelly Quigley, Crain's Chicago Business, January 22, 2004. On February 23, 2004, ICP filed even more detailed comments. J.P. Morgan Chase, which is a top-ten subprime lender and securitizer, began quietly in August 2003 seeking to preempt all states' anti-predatory lending laws, by shifting its nationside consumer finance lending into a federally-regulated savings bank. Later, Chase shifted from a New York State-chartered bank to a national bank. ICP, long concerned with Chase's disparate lending, began an inquiry into complaints filed against Chase with state regulators -- a venue that Chase now seeks to escape. Some of these complaints are summarized below on this page, and are now being raised by ICP in opposition to Morgan Chase's April 2006 proposal to acquire 338 branches from Bank of New York. For or with more information, contact us.
Update
of May 5,
2008: Step by sleazy step, the FERC last week rubber stamped
J.P. Morgan Chase
to bolt-on Bear Stearns Cos. energy assets to its portfolio, saying
that the
deal won't have any harmful effect on prices or "eliminate a
competitor"
-- what? Bear Stearns has a number of
energy affiliates selling electricity on a wholesale basis at
market-based
rates in the Midwest. J.P. Morgan also has subsidiaries that own
interests in
electricity generation facilities. We'll see...
Update of April
28, 2008
Update
of April 21, 2008
Update of April 14, 2008: Delaware vice-chancellor Donald Parsons has stayed litigation challenging the proposed acquisition of Bear Stearns by JPMorgan Chase, deferring to a similar court case in New York. Parsons noted that the Delaware lawsuit mirrors five lawsuits that have been consolidated on an expedited basis by the New York Supreme Court. That court has scheduled a May 8 hearing on a preliminary injunction barring a shareholder vote to approve the deal. "The judge also noted the unique circumstances of the planned government-assisted merger" -- so now, the Federal Reserve's outrageous exclusion of any public review of the deal is used by court to avoid judicial review...
And this is not even dealing yet with the Fed's sleazy deal with Blackrock, answers on which are due on April 18...
Update
of April 7,
2008: In
the first study of the just-released 2007 mortgage lending data, Inner
City
Press / Fair Finance Watch finds that JPMorgan Chase in 2007 confined
African
Americans to higher-cost loans above this rate spread 2.44 times more
frequently than whites, according to Fair Finance Watch. Chase's
disparity to
Latinos was 1.60. The percentage of Chase's loans which were over the
rate
spread actually went up from 2006 (19.28%) to 2007 (20.96).
In
its headquarters Metropolitan Statistical Area (SA) of New York City,
Chase
confined African Americans to higher-cost loans above the rate spread
2.92
times more frequently than whites. Chase's disparity to Latinos was
2.50.
In
the New Orleans MSA Chase confined African Americans to higher-cost
loans above
the rate spread 2.25 times more frequently than whites. It denied over
50% of
mortgage applications from African Americans. Meanwhile the Federal
Reserve is
bending if not breaking applicable law to allow Chase to acquire Bear
Stearns
and bail it out from its speculative involvement in predatory lending.
Update of March 31,
2008:
While the Federal Reserve at least agreed to hold two public
hearings on
Bank of America's application to buy Countrywide Financial, it has
remained
silent on its highly-questionable bail-out of Bear Stearns via JPM
Chase. ICP
Fair Finance Watch has submitted a second comment:
March 30, 2008
Board of Governors of the
Federal Reserve System
Attn: Chairman Ben
Bernanke, and Secretary & FOIA Officer
20th St and Constitution Ave, N.W. Washington, DC 20551
Re: Second Comment and Freedom of Information Request Regarding the FRS' Communications with, Consideration and Authorization of JPMorgan Chase (with its affiliates, "Applicants") to lend to and acquire Bear Stearns (with its affiliates, "Target")
Dear Chairman Bernanke and others in the FRS:
On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a second comment and request under the Freedom of Information Act (5 U.S.C. § 552; "FOIA") regarding the Federal Reserve System's (the "FRS'") communications with, consideration and authorization of JPMorgan Chase (with its affiliates, "Applicants") to lend to and prospectively acquire Bear Stearns (with its affiliates, "Target").
While JPM
Chase is claiming that it somehow has the necessary regulatory
approvals, it is
imperative that the FRB conduct a public review of this unprecedented
proposal,
including in light of the material hereby formally submitted to the
FRS. ICP
hereby contends that regulatory approval is needed, that public input
must be
allowed, and that the FRB is conflicted in reviewing this transaction
and these
requests, as it has become a participant in the deal and underlying
predatory
loans.
Bear Stearns' involvement in questionable subprime lending led to its problems. Now it has emerged, with documentary proof, that JPM Chase has been involved systemically in the worst forms of predatory lending, fraudulently inflating borrowers' income in order to make loans they can't afford. See, now in the public record, Chase's memo about how to "game" its ZiPPY system:
ZiPPY Cheats &
Tricks...
If you get a "refer" or if you DO NOT get Stated Income / Stated
Asset findings.... Never Fear!! ZiPPY can be adjusted (just ever so
slightly)
Try these steps next time you use Zippy! You just might get the
findings you
need!!
* Always select
"ALTERNATE DOCS" in the documentation drop down.
* Borrower(s) MUST
have a mid credit score of 700.
* First time
homebuyers require a 720 credit score.
* NO! BK's OR
Foreclosures, EVER!! Regardless of time!
* Salaried borrowers
must have 2 years time on job with current employer .
* Self employed must
be in existence for 2 years. (verified with biz license)
* NO non-occupant co
borrowers.
* Max LTV/CLTV is
100%
Try these handy steps
to get SISA findings . . .
1) In the income section of your 1003, make sure you input all income
in base
income. DO NOT break it down by overtime, commissions or bonus.
2) NO GIFT FUNDS! If
your borrower is getting a gift, add it to a bank account along with
the rest
of the assets. Be sure to remove any mention of gift funds on the rest
of your
1003.
3) If you do not get
Stated/Stated, try resubmitting with slightly higher income. Inch it up
$500 to
see if you can get the findings you want. Do the same for assets.
It's super easy! Give
it a try! If you get stuck, call me . . . I am happy to help!
See also,
Subj: Chase Home
Finance LLC
Date: 3/27/2008 11:31:14 P.M. Eastern Daylight Time
From: [Name withheld in this format]
To: Inner City Press
Please take a
look at what Chase Home Finance LLC is doing.
If it weren't
happening to me, I would think this was a scam.
They haven't to my
knowledge started any foreclosure proceedings yet, but although I am
current on
both my mortgages, they are sending letters/statements that I am 2
months
behind.
Here in Georgia (a
non-judicial state for foreclosures) one only has to be 3 months behind.
I have emailed Chase,
written to them, to no avail. I refuse to answer their calls as I
find
them to be harassing and the one time I did call them, I was assured
that all
was well. Yet I still receive incorrect statements.
Something needs to be
done on behalf of those who have already fallen prey and those who may
become victims.
Not only due to the highly-questionable FRB assistance to the bail-out of a bottom-feeding investment bank by an above-confirmed predatory lender, but also the above consumer fraud issues, the FRB must hold public hearings.
Update of March 16, 2008:
WashPost -
Guardian (UK) The
day after news of the Federal Reserve's murky bailout of Bear Stearns
through JPMorgan Chase, Inner City Press / Fair Finance Watch filed
with the Federal Reserve Board in Washington, and the Federal Reserve
Bank of New York, a complaint and request under the Freedom of
Information Act, portions of which follow:
March 15, 2008
By fax to DC and NY
Board of Governors of
the Federal Reserve System
Attn: Chairman Ben Bernanke, and Secretary & FOIA Officer
20th St and Constitution Ave, N.W. Washington, DC 20551
Re: Petition, Challenge and Freedom of Information Request Regarding the FRS' Communications with, Consideration and Authorization of JPMorgan Chase (with its affiliates, "Applicants") to lend to, do due diligence on and prospectively acquire Bear Stearns (with its affiliates, "Target")
Dear Chairman Bernanke and others in the FRS:
On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a petition, challenge and request under the Freedom of Information Act (5 U.S.C. § 552; "FOIA") regarding the Federal Reserve System's (the "FRS'") communications with, consideration and authorization of JPMorgan Chase (with its affiliates, "Applicants") to lend to, do due diligence on and prospectively acquire Bear Stearns (with its affiliates, "Target").
First, ICP formally challenges at the earliest time possible the FRB's approval on March 14 without public notice or comment of an indirect bailout of Bear Stearns, which is not a Bank Holding Company and does not own a bank, through JPMorgan Chase as anti-competitive, contrary to the public interest, a violation of the FRB's duties and, by the way, entirely illegal.
The FRB's claimed power to lend to a non-depository corporation like Bear Stearns in "unusual and exigent circumstances" generally requires "the affirmative vote of not less than five members." Even 12 U.S.C. Section 248(r)(2)(A)(ii)(III) and (IV), mandates a finding that "action on the matter is required before the number of Board members otherwise required to vote on the matter can be contacted through any available means (including all available telephonic, telegraphic, and other electronic means)." There has been no showing that, given technology in 2008 (as opposed to the 1930s when this language was enacted), the required attempts to contact Gov. Mishkin were made -- that "despite the use of all means available (including all available telephonic, telegraphic, and other electronic means), the other members of the Board have not been able to be contacted on the matter." The Fed's March 14 actions were unlawful, and must be rescinded.
Second, 12 U.S.C. Section 248(r)(2)(A)(iii) requires that "any credit extended by a Federal reserve bank pursuant to such action is payable upon demand of the Board." But already it is speculated that the FRS may not be paid back.
Third, to allow this relation between the nation's third largest bank and fifth largest brokerage, without any antitrust review, even with the required votes which the FRB did not have, is unlawful. The FRB has no authority to pre-approve any prospective acquisition of Bear Stearns by JPMorgan Chase, which some in the financial press predict for as early as March 17. This formal petition, faxed to the FRB on March 15, requests that JPMorgan Chase and Bear Stearns be informed forthwith that any proposed combination would require prior public notice and, ICP is requesting, public hearings.
Fourth, 12 U.S.C. Section 248(r)(2)(A)(ii) required the Board -- including Gov. Mishkin, see supra -- to find that
(I) unusual and exigent circumstances exist and the borrower is unable to secure adequate credit accommodations from other sources; and
(II) action on the matter is necessary to prevent, correct, or mitigate serious harm to the economy or the stability of the financial system of the United States;
But Bear Stearns got in trouble due to reckless enabling of predatory mortgage lending which is imperiling consumers and communities. To offer a bailout to a perpetrator and enabler -- particularly but not only while doing very little for the victims of these practices, many of whom face imminent foreclosure -- only encourages further predatory lending, contrary to the public interest findings required by 12 U.S.C. Section 248(r)(2)(A)(ii)(II).
Fifth, serious questions are raised by Bear Stearns Chief Executive Alan Schwartz having not disclosed Bear's financial condition, including in an interview earlier in the week on CNBC. While the FRB may claim that it does not regulate Bear Stearns, in light of the unseemly bailout, the FRB has a responsibility to inquire in and act on these presumptive violations by Bear Stearns and its senior management and board. Additionally, Bear Stearns' barring of the broadcast to investors of its March 14 conference call, reportedly on the claim that it was covered by copyright, presumptively violated Regulation FD.
This is also a request under the FOIA for all records reflecting communications involving Federal Reserve System ("FRS") personnel to, from or about the above-named companies or their affiliates since January 1, 2008, and, specifically, for all documents related to the findings and communications required by 12 U.S.C. Section 248(r)(2)(B), mandating that the Board
"shall document in writing the determinations required by subparagraph (A)(ii), and such written findings shall be included in the record of the action and in the official minutes of the Board, and copies of such record shall be provided as soon as practicable to the members of the Board who were not available to participate in the action and to the Chairman of the Committee on Banking, Housing, and Urban Affairs of the Senate and to the Chairman of the Committee on Financial Services of the House of Representatives."
In this regard, ICP reminds the Board that in 1998 after its ex parte communications with Citicorp and Travelers, it affirmatively disclosed what had been said to whom, and when. No less, and in fact more, is required in this case.
As to Exemption 4, consider JPM Chase and Bear Stearns were / would have been required to provide the Board with this information. Therefore, this information must be disclosed under FOIA unless such disclosure would: (1) impair the Board's ability to obtain necessary information in the future; or (2) cause substantial harm to the banks' competitive position. Since neither of these two tests can be met, the withheld information must be released.
Since the Applicant was, in context, "obliged" to provide the Board with the information contained in these Exhibits, that information can only be withheld if disclosure would likely: "(1) impair the Government's ability to obtain necessary information in the future; or (2) cause substantial harm to the competitive position of the person from whom the information was obtained." Critical Mass Energy Project v. Nuclear Regulatory Comm'n, 975 F.2d 871, 878, 880 (D.C. Cir. 1992); National Parks and Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). [legal argumentation omitted in this format.] If you have any questions, please immediately telephone the undersigned, at (718) 716-3540.
Very Truly Yours,
Matthew Lee, Esq.
Executive Director
Update of March 3, 2008: Now JPMorgan Chase must file reports on its mortgage delinquencies and foreclosures with the Office of the Comptroller of the Currency. Information from October 2007 through February is due by March 31. Better late than never.
Update of January 14, 2008: There's been a story that Washington Mutual had exploratory merger talks with JP Morgan Chase, since WaMu's subprime lending has gotten it into such financial straits. A follow-up article said that JPM Chase-WaMu would still be below the 10% nationwide deposit cap. And see, Tony Blair's UN Role May Conflict with New Job with JP Morgan Chase.
Update of December 17, 2007: Pundits name JPMorgan Chase as along the most likely candidates to buy GE's credit card unit, which issues private-label and cobranded cards with a number of retailers like Wal-Mart Stores. Good luck...
Update of October 22, 2007: What is the purpose of the Master Liquidity Enhancement Conduit being set up by JPM Chase, Citigroup, Bank of America and a few other banks? Not to help consumers, that's for sure. Rather, it's a way to cook their own books, and avoid reporting losses. That non-banks like PIMCO are not participating, despite the U.S. Treasury Department's Paulson's closed-door claims to the contrary to Italian central banker Mario Draghi, is telling. This is about banks helping themselves. And taking advantage of each other: Inner City Press has learned that JPM Chase's Jaime Dimon has called the conduit an opportunity to make money from his old nemesis Citigroup. "Make it worthwhile," Dimon told Paulson. "Gouge them," Dimon in essence ordered his staff. Just as these banks said of consumers...
Update of October 15, 2007: Revolting revolving door: on the American Bankers Association's committee to weaken anti-money laundering laws are a slew of former regulators, including William Langford, a former director of regulatory affairs at Fincen and now a senior vice president of global AML at JPMorgan Chase, which hired directly from the agencies, and now uses Langford to lobby for de-regulation... Meanwhile, Chase is slashing jobs at its leveraged finance and structured credit units...
Update of May 21, 2007: From a report last week, 2006 subprime mortgage volume and status of " Chase Home $11,548 -- may be a buyer." Great...
Update of May 14, 2007: Why is it not surprising that Jaime Dimon would be dining with the CEO of Dow Chemical -- under attack by Amnesty International for still not addressing the Bhopal issues it bought with Union Carbide -- and fingering some of Dow's officials, J. Pedro Reinhard and Romeo Kreinberg? Let the depositions begin...
Update of April 30, 2007: It was reported last week that JPMorgan Chase's subprime mortgage lending grew 20% from 2005 ($9.6 billion) to 2006 ($11.5 billion)...
Update of April 23, 2007: Why are we not surprised that JPM Chase is buying into Sallie Mae, which alongside its controversial student lending is a subprime lender? Sleazy is as sleazy does...
Update of April 16, 2007: Last year, the Office of the Comptroller of the Currency sued in New York to assert that only it had jurisdiction over the national banks owned by Citigroup. New York's attorney general ended up acting on lending disparities only at Countrywide Financial, which had yet to shift its lending under the umbrella of Federal law. Now from the just-released 2006 HMDA data, for purposes of comparison, Countrywide confined Latinos to higher-cost loans above this rate spread 1.38 times more frequently than whites. JP Morgan Chase was more disparate, confining Latinos to higher cost loans 1.63 times more frequently than whites.
Update of April 9, 2007: In a study of the just-obtained 2006 mortgage lending data, ICP & Fair Finance Watch have identified disparities by race and ethnicity in the higher-cost lending of some of the nation's largest banks. 2006 is the third year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. Among other findings, JP Morgan Chase, 19.28% of whose 2006 mortgages were subprime, was particularly disparate in the New Orleans MSA, where Chase confined African Americans to higher-cost loans 2.74 times more frequently than whites.
Update of March 19, 2007: From the WSJ of March 14: "J.P. Morgan Chase fell $2.14, or 4.4%, to $46.70, the industrial average's biggest percentage decliner."
Update of March 12, 2007: Chase on subprime cavalier: Charlie Scharf, the head of JPMorgan Chase's retail banking business, said that the bank won't be hurt severely by the subprime downturn. While it may have a "negative impact ... it's quite manageable for a company like ours," Scharf said. JPMorgan has about $20 billion in subprime loans, representing about 5% of its total assets, the company said Tuesday. About $13 billion of that is in mortgages, with another $1.5 billion in home equity loans. The rest of the subprime portfolio is split between credit cards and auto loans....
Update of March 5, 2007: As JPMorgan Chase's China hand quits, and another Chaser moved into the Treasury Department, we'll soon have more on JPM Chase's role in delivering unemployment benefits (and, of course, tax refund anticipation loans)....
Update of February 26, 2007: JPM Chase continues its stealth expansion in subprime, this week in the UK, raising its stake in Cattles PLC, which is in takeover talks with its smaller rival London Scottish Bank PLC...
Update of February 19, 2007: Who had been propping up the subprime lender Fieldstone, sold last week to C-BASS? Why JPMorgan Chase, of course...
Update of February 12, 2007: Heading east, JP Morgan Chase last week filed with China's banking regulator to incorporate its China operation in Beijing, according to the WSJ, the move making it the first foreign bank to seek local incorporation in China's capital...
Update of February 5, 2007: Last week, JPM Chase's CEO Dimon predicted or threatened that Chase could capitalize on falling prices for subprime loans by buying them. "We are an economic animal," he said, right on at least one front...
Update of January 29, 2007: The context of Chase's retail management moves last week: "Tom Wind, who was responsible for JPMorgan Chase's mortgage origination business, left to head Aurora Loan Services, a lender owned by Lehman Brothers (which is being challenged these days, in Boston and elsewhere). In December 2004, Steve Rotella, the head of mortgages who had been with the company since before the Bank One merger, left to become second-in-command at Washington Mutual" -- so Chase brings in people with histories with predatory lenders, from CitiFinancial and GE Money...
Update of January 8, 2007: The bankruptcy proceeding surrounding the failed subprime lender OwnIt contains a rogue's gallery of OwnIt's enablers, including the ambiguously named, JPM Chase-affiliate J.P. Mortgage Acquisition Corp. which submitted an $11.29 million claim...
Update of January 1, 2007: We begin the year with a blind item. Which recent Chase Mortgage hire in Milwaukee was chosen despite race discrimination charges at previous place of employ? And what does this say about Chase's due diligence and standards?
Update of December 25, 2006: A source in Ohio informs us, of the Ohio Bureau of Motor Vehicles, about "a mailing I got from the agency today. Enclosed with vehicle registration renewal is coupon from Chase Bank worth $75 upon opening a Chase bank account. Cute. This is nothing more than state agency acting as 'bird-dog' for a major bank that finances automobile loans. As you know, this bank has a blemished history here in Cleveland and Ohio." Predatory... And also an enabler of predators: last week's Inner City Press exclusive, concerning Merrill Lynch driving subprime lender OwnIt out of business, was picked up without attribution by other papers last week. One of them reported a new fact, that JPMorgan Chase was also an enabler of OwnIt: "JPMorgan Chase & Co., the disbursement agent for Ownit's "wet line." (This was a small warehouse line Ownit used to finance loans temporarily before transferring them to its main warehouser, Merrill)."
Update of December 18, 2006: Chase is selling subprime. Investment bankers, analysts, and others familiar with predatory lending said last week that Ameriquest's parent ACC has hired JPMorgan Chase & Co as adviser to sell the company and is seeking between $1.5bn and $2bn for the franchise...
Update of November 27, 2006: JPM Chase settled EEOC discrimination charges for $2.2 million last week...
Update of November 20, 2006: According to the November 18 Cleveland Plain Dealer: JP Morgan Chase "has removed all of its loan officers from the city and region," the report notes. "The bank has also significantly reduced its office presence in the city." It ranked JP Morgan Chase third from the bottom. However, it profited more than most of the other banks in recent years from its business with the city. And JP Morgan Chase held more than $13 million of Cleveland's money, according to the city's bank statements."
In auto finance, three years ago, Chase Auto Finance was nearly neck and neck with DaimlerChrysler Financial Services, which was then the No. 3 lender behind General Motors Acceptance Corp. and Ford Credit. "We were booking $2 billion to $2.3 billion a month,'' says Joseph Scimone, president of Chase Auto Finance. "We had the best rate in town.'' According to Crain's, "as interest rates climbed, Chase shifted its strategy. It increased its loan rates to boost profitability and it reached out to a broader spectrum of customers. Chase used to target only superprime and prime customers. Now it also goes after near prime and subprime customers." Chase goes more and more subprime all the time, including by putting a predatory CitiFinancial official in charge of all of Chase's mortgages.
Last week Inner City Press sat down for an interview with the president of the Nagorno-Karabakh Republic, Arkady Ghoukasyan, and asked him about the fires, about the United Nations and other matters. Click here for the footage, on Google Video.
Update of November 13, 2006: Last week JPM Chase was fined $500,000 by NASD for its 529 plans, and lost a court decision about Parmalat...
Update of November 6, 2006: The hits just keep on coming. JPMorgan Chase disclosed last week that it had received a letter from the SEC, seeking information about the relationship between Bisys Fund Services, the fund administrator, and the bank's mutual fund unit...
Update of October 30, 2006: JPMorgan Chase announced last week that it had hired David Lowman, the head of CitiFinancial International since 2004, to run its mortgage business and "help expand it globally in consumer finance." What better way than with a predatory lender...
Update of October 16, 2006: On JPMorgan Chase's role in the "block box" bond scam: " In the Florida deal, a little-known government body called the Capital Trust Agency turned the work over to its advisers: Anchor National Life Insurance, a subsidiary of AIG; CDR Financial Products, a financial advisory firm in Beverly Hills, California; and the underwriter J.P. Morgan. These companies and other middlemen extracted $12 million in fees from the bond issue; the rest of the money went unused. The AIG unit and CDR had an agreement that the agency said it did not know about. The agreement allowed CDR to increase its fees as long as the money was not spent for its intended purpose, according to a Nov. 18, 1999, letter from CDR's president, David Rubin, to AIG's Anchor National vice president, J. Franklin Grey. The less money that was used to acquire and renovate apartments, the more money CDR stood to make, and the less risk AIG's affiliate faced as an insurer since all of the money stayed in a safe account. 'Black box deals, pooled deals, blind pools - people call them lots of things,' said Sherman Golden, an Atlanta-based bond lawyer, who said that he experienced one of these deals firsthand when he was a municipal official. He said that he has seen too many deals that benefited banks and other promoters at the expense of taxpayers. A spokeswoman for J.P. Morgan declined to comment. Black box bond deals also rob the U.S. Treasury of about $100 million a year in revenue." -Bloomberg News.
Update of October 9, 2006: JPMorgan Chase is now the third largest subprime mortgage servicer in the United States, ahead even of Wells Fargo, Option One, New Century and Ocwen (NMN 10/9).
Update of October 2, 2006: Florida is suing a "Tampa-area company called Global Information Group Inc., claiming it made thousands of calls impersonating customers of companies including Verizon Communications Inc., tricking them into providing private call records. Earlier this year the company's principals agreed to pay $250,000 to settle the case, and to cease any "pretexting" activities." Global Information's customers include Chase Bank...
Update of September 25, 2006: From the Office of the Comptroller of the Currency's craven September 15 approval of JPM Chase's application to acquire branches of Bank of New York: Fair Finance Watch
"expressed concerns about the potential closure of certain branches. JPMCB... expects that it may close approximately 50 branches. JPMCB has represented that in NYC, some of the branches under review are located in L[ow or] M[oderate] I[ncome] census tracts. [Footnote: In most cases, the branches being considered for closing or consolidation are less than one-fifth of a mile apart, and none is more than about one-third of a mile apart.]"
First, in New York City "about" a third of a mile can be further than it sounds, particularly with obstructions which must be walked around. The OCC should have required JPM Chase to disclosure its branch closing plans, as even the Federal Reserve did in connection with Chase - Chemical. JPM Chase is going backwards here....For or with more information, contact us.
Update of September 18, 2006: This week we'll let Mother Jones magazine's Sept.- Oct. story about predatory lenders in Cleveland, including Bank One now JPMorgan Chase, speak for itself:
"Robert Perry got laid off from his assembly line job at Alcoa's Cleveland aircraft wheel assembly plant in 2002. He took the only alternative Alcoa offered: a gig as a janitor, at $16 an hour. His mortgage was $900 a month. After he fell behind, his mortgage company proposed a monthly payment of $1,200. When he still couldn't keep up, the lender proffered another deal: a $2,565 lump payment and $1,000 a month. The entire payment was due the last day of that month. Perry wouldn't get paid until the first of the next. He came up $250 short, so Bank One, which held the mortgage, moved to foreclose on his home of 14 years."
For or with more information, contact us.
Update of August 28, 2006: JP Morgan Chase last week purchased a 2% stake in Russia's Bank of Moscow...
Update of August 21, 2006: Among the main complainers to the Federal Reserve about Basel II is... JPMorgan Chase.
Update of August 14, 2006: Subprime by any other name - a report from JPMorgan Securities is looking at 40-year, fixed-rate mortgages versus 30-year TBAs. "The report begins by comparing monthly payments on a 40-year mortgage to that of a 10/20 IO and a regular 20-year mortgage. For the analysis, researchers assume a $200,000 loan at a rate of 6.75%, which is the current prevailing no-point mortgage rate. Though it initially appears that 40-year mortgages can increase payment savings, results show otherwise "After adjusting for higher mortgage rates [charged for 40-year mortgages], savings from a 40-year mortgage drops to just 4% (or $27 per $100,000 loan balance). In comparison, an IO loan still would offer a 12% in monthly payment savings," analysts said... The lower FICOs suggest that 40-year mortgages are more like Alt-A, with the lower FICOs mitigated by the lower LTV and higher refinancing shares."
Update of August 7, 2006: Chase is growing in subprime, and bragging about it. Its press release last week called it "near prime," and it "will expand its presence in the Atlanta area this month by opening a Prime/Near Prime business center to focus even more attention on area auto dealers looking to provide their customers with auto loan solutions. The new office will occupy space with Chase's existing Custom Finance Business Center at 500 Town Park Lane, Suite 100 in Kennesaw." Just what Georgia needs - more subprime lending. It should be noted that when Georgia sought to control subprime mortgage lending, Chase threatened to leave the state...
Update of July 24, 2006: JPMorgan Chase last week reported a decline in retail banking profits, largely on weakness in its mortgage servicing. Jamie Dimon spun that rising interest rates and a likely increase in bankruptcy filings -- which were depressed after the bankruptcy law was toughened last fall -- could lead to credit card losses at JPMorgan Chase of 'several hundred million dollars' in the third quarter, and perhaps as much as $500 million before year's end. 'In credit cards, we know it's going to happen. ... We're telling people upfront,' he said....
Update of July 17, 2006: As JPMorgan Chase prepares to release and spin its earnings on July 19, it's worth noting that JPM Chase is still growing in subprime. Chase is now the fourth largest servicer of subprime mortgages, with $75 billion dollars worth, an increase of 5.62 percent from a year before...
Update of July 10, 2006: The WSJ too-cutely reported that "J.P. Morgan Chase & Co. has been on a publicity blitz, plastering its name on New York City taxis, coffee cups, and drugstores... The bank's new gimmick: free tickets to the U.S. Open tennis championships to people who use its automated teller machines. The bank, which sponsors the tournament, will hand out more than 5,000 tickets to ATM users who show a receipt with a blue tennis ball printed on the back."
Previous CEO Bill Harrison Wildly mispronounced the women's Open winner's name. Perhaps Jaime Dimon will bone up better?
July 3, 2006: Crain's last week had a puff piece about how JPM Chase CFO Heidi Miller really wanted to be an academic in Latin America history. But the more timely question, given Ms. Miller relation to SWIFT which gave up private banking records, is what was her (and JPM Chase's) position on that? We're waiting...
Update of June 26, 2006: While moving to close branches in New York, JPMorgan Chase is eying Moscow as well, announcing June 22 that it's "considering participating in Bank of Moscow's capital increase, once the rights period extended to current shareholders closes. The bank said its potential participation would be a minority financial investment and is subject to, among other things, regulatory approval." Hmm...
Update of June 19, 2006: In a June 16 letter to the OCC, JPMorgan Chase's outside counsel at Wachtel Lipton argues that the bank doesn't have to disclose the locations of the (at least) 50 branches to be closed, because as to some of the closings, they'll be later public notice. But this ignores that Chase made exactly these disclosures when it merged with Chemical. So what's the difference, other than that Chase has gotten more and more disdainful of the public, particularly in low income neighborhoods, as it has done each merger since Chemical?
Update of June 5, 2006: Just another compliance violation -- last week the Cox-softened SEC filed JPM Chase for violations in auction-rate securities which favored certain customers over others, and tilted the auctions in favor of issuers over customers -- kinda like its predatory lending. And still no word from the Office of the Comptroller of the Currency on JPM Chase's application to buy BONY's branches and close at least 50 of them -- not about the public hearing requests, nor the locations of the branches to be closed...
Update of May 29, 2006: Inner City Press / Fair Finance Watch was asked to review JPM Chase's lending in Brooklyn, and has done so: In 2005 in Brooklyn, JPMorgan Chase confined African Americans 3.32 times more frequently than whites to higher cost loans over the federally-defined rate spread of 3% over Treasury securities on a first lien, 5% on subordinate liens. JPM Chase confined Latinos 2.84 times more frequently than whites to loans over the rate spread.
Also in Brooklyn in 2005, JPMorgan Chase denied 42.14% of mortgage applications of African Americans, and 36.78% of applications from Latinos, compared to only 29% of applications from whites.
Simultaneously JPM Chase seeks to buy 338 branches from Bank of New York and close 50 of them, including at least four in low- or moderate-income census tracts in NYC, without even disclosing at this stage the locations of the branches.
Update of May 18, 2006: JPMorgan Chase has today for the first time specified that it has identified in low- and moderate-income census tracts four of the Bank of New York branches it seeks to acquire "which are located close to a JPMCB branch." This is essentially code language that these four low-income branches would be closed if the acquisition is approved. JPM Chase's statement, in a May 18 letter responding to Inner City Press/Fair Finance Watch's April 17 and May 6 comments to the Office of the Comptroller of the Currency, declines to provide the addresses of these four branches and the 46 other branches, some surely adjacent to low-income tracts, which the letter projects would be closed. Also, the figure "four LMI branches" is qualified by the statement "in New York City." Since many of Bank of New York's branches are outside of the five boroughs, might even more than four low- and moderate-income census tract branches be closed? ICP is reiterating its call for public hearing, including on JPM Chase's admission in its response that it still funds payday lenders. Developing...
Update of May 15, 2006: Last week JPM Chase's application to acquire 338 Bank of New York branches arrived, two velo-bound volumes with a cover letter to the OCC in Washington. In all the paper, not a mention of the branch closings that would result, much less their impact on low and moderate income areas...
Update of May 8, 2006: On JPM Chase-Bank One, ICP submitted a detailed first comment on April 17, which analyzed JPM Chase nationwide and in New York.ICP has continued its review of the worsening pricing disparities in JPM Chase's 2005 lending record, looking at JPM Chase's (and the nation's) major states, beginning with the states in which JPM Chase seeks to buy branches, then in the states impacted by Hurricane Katrina, then in other states.
Connecticut --At JPM Chase for conventional first-lien loans in Connecticut in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.71 times more frequently than non-Latino whites (again worse even that JPM Chase's nationwide disparity of 2.98, set forth in ICP's April 16 comment). JPM Chase's Latino to white disparity in Connecticut in 2005 was 2.76. For home purchase loans in Connecticut, JPM Chase was even more disparate: non-Latino African Americans were confined to higher cost loans over the rate spread 4.69 times more frequently than non-Latino whites. ICP has designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on lenders' own customers. At JPM Chase for conventional first-lien loans in Connecticut in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.94 times, and Latinos 4.73 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held, including in Connecticut.
New Jersey -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.98 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in New Jersey in 2005 was 2.64. For home purchase loans in New Jersey, JPM Chase was even more disparate: non-Latino African Americans were confined to higher cost loans over the rate spread 4.69 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was even higher, at 4.56. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.16 times, and Latinos 3.62 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held, also in New Jersey.
Louisiana -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.90 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.70 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.30 times. Income does not explain the disparities at JPM Chase. Public hearings should be held.
Alabama -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 4.33 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 5.54 times. Income does not explain the disparities at JPM Chase. Public hearings should be held.
Mississippi -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.74 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.29 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.17 times. Income does not explain the disparities at JPM Chase. Public hearings should be held.
Delaware -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.94 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.54 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was even higher, at 4.27. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 2.51 times, and Latinos 2.54 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.
Arizona -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread tw0 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in 2005 was 2.25. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.08 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 2.35 times, and Latinos 3.42 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.
Illinois -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.85 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in 2005 was 1.81. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 3.86 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 1.95. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.84 times, and Latinos 3.37 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.
Florida -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.01 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in 2005 was 1.97. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.82 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 2.59. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.49 times, and Latinos 2.54 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.
California -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.89 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in 2005 was a whopping 5.16. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 3.72 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 2.49. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 5.43 times, and Latinos 8.55 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.
North Carolina -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 4.04 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 4.33 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 4.86 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.
Michigan -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.19 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread four times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.73 times, and Latinos 1.60 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.
Massachusetts -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.71 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 3.09 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 4.79. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 2.88 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.
And finally (for now), in Georgia, a state JPM Chase heavy-handedly threatened to pull out of in light of anti-predatory lending controls passed by the state legislature, in 2005 at JPM Chase for conventional first-lien loans, non-Latino African Americans were confined to higher cost loans over the rate spread 3.44 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 4.98 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.66 times, and Latinos 2.02 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase, including in Georgia. Public hearings should be held.
Update of May 1, 2006: Bank of New York, which the Federal Reserve hit with a $38 million money laundering fine in 2000 (for having moved $7 billion in hot Russian money), has now settled again, without even paying a fine. The Fed and the New York Banking Department have slapped Bank of New York on its BONY wrist for new deficiencies in the bank's money laundering controls, giving it 60 days to comply with yet another order. And if it doesn't? Well, it can just settle again. This will be raised, and reviewed, in connection with JPMorgan Chase's applications to acquire 338 (presumably money laundering) branches from BONY... For or with more information, contact us.
Update of April 24, 2006: Inner City Press / Fair Finance Watch has now conducted a comparative study of 2005 Home Mortgage Disclosure Act data, this time focused on New York City, and has found that JPM Chase confined its borrowers in Queens to higher-cost loans above the rate spread 8.64 times more frequently than in Manhattan. Chase's disparities were also intra-borough: in 2005 at JPMorgan Chase African Americans in Manhattan were confined to higher cost loans over the rate spread 11.42 times more frequently than whites in Manhattan...
Update of April 17, 2006: Inner City Press / Fair Finance Watch has just filed a challenge to JPMorgan Chase's proposal to buy 338 branches from Bank of New York, and to close at least 50 of the branches. Portions of ICP's comments are below; see also, "Group tries to block JPMorgan/Bank of NY swap," by Jonathan Stempel, Reuters, April 17, 2006; "Community group challenges JPMorgan Chase deal for Bank of New York retail outlets," Associated Press, April 17, 2006
OPPOSITION TO THE PROPOSAL BY JP MORGAN CHASE & CO. TO ACQUIRE BANK OF NEW YORK'S 338 BRANCHES (AND CLOSE 50 BRANCHES) AND BONY'S APPLICATIONS: PETITION TO DENY AND HEARING REQUESTS BY INNER CITY PRESS / FAIR FINANCE WATCH
I. Preliminary Statement
On behalf of Inner City Press/Community on the Move and its members and affiliates, including the Fair Finance Watch (collectively, “ICP”), this is a comment opposing and requesting hearings on the proposal by JP Morgan Chase & Co. and its subsidiaries, including its subprime lending subsidiaries such as Chase Home Finance, and its subprime lending enabling subsidiaries, such as JP Morgan Securities (collectively, "Morgan Chase" or "Chase") to acquire the retail business and 338 branches of Bank of New York (and to close 50-some branches) and of BONY's applications.
With this proposal JPMorgan Chase, which is the combination of numerous separate banks which used to compete, particularly in New York, seeks to acquire 338 more branches, disproportionately not in under-served lower income areas. The proposed combination is anticompetitive. Of much continuing concern to ICP, JPMorgan Chase is engaged in disparate and standardless subprime mortgage lending (that is, in predatory lending), and disproportionately excludes low- and moderate-income communities, and people of color, from its offers of prime-priced credit. Chase's disparities are worsening as it admits to getting deeper into subprime, as reported for example in the American Banker newspaper of December 21, 2005, "Chase Moving into Subprime."
As demonstrated in exhibits hereto, JPMorgan has succeed Bank One as a lender to pawnshops and other fringe financiers like payday lenders. On compliance with the Servicemembers' Civil Relief Act, there are questions of JPMorgan Chase's compliance, as demonstrated by the sample exhibits referred to herein. Additionally, JPMorgan Chase's investment bank continues to securitize for other subprime lenders, and is in fact growing in this standardless business. In the first three months of 2006, JP Morgan Chase was among the top ten securitizers of subprime loans, according to the trade publication Inside B&C Lending of April 14, 2006 -- its volume of subprime loans securitized in the quarter jumped to $6.8 billion from just $1.8 billion in the first quarter of 2005. These have included securitizing for Ameriquest units Argent Mortgage and Olympus, in Chase Funding Loan Acquisition Trust, series 2004-AQ1. Ameriquest recently settled charges of predatory lending for $325 million. Chase not only engages in, but also enables, predatory lending.
Section II of this Comment analyzes JP Morgan Chase's mortgage lending disparities based on the brand new 2005 Home Mortgage Disclosure Act data, which no CRA or fair lending exam has taken into account. Section III demonstrates that JPM Chase, despite public statements of concern with money service businesses, has picked up from Bank One in lending to pawnshops and even payday lenders, and otherwise enabling questionable subprime lenders. Section IV raises questions concerning JPM Chase's compliance with the Servicemember's Civil Relief Act, including with specific complaints from military personnel, and other consumer complaints, including of JPM Chase's behavior in the areas impacted by Hurricane Katrina (where Chase also funds pawnshops). Section V concerns prospective branch and service loss, given JPM Chase's past record, including continuing allegations of employment discrimination. Just last month, JPMorgan Chase said it will pay $425 million to try to settle the three-year-long dispute about the bankrupted National Century Financial Enterprises, on whose board of directors three Chasers served. The 8K also said that the SEC's staff is considering whether or not to recommend civil charges against JPMorgan Chase and two of the current or former employees who had served on National Century's board... Also, on March 9, 2006, Japan's financial watchdog penalized the Tokyo branch of J.P. Morgan Securities Asia for breaking the securities laws. The Financial Services Agency ordered the Tokyo branch to suspend part of its stock-futures trading between Friday and March 31 because the company manipulated futures contracts. ICP is requesting public hearings and that on its current record, JPMorgan Chase's application be denied.
II. JPM Chase's Disparate 2005 Mortgage Lending Record, Nationwide & in NYC
Nationwide
At JPM Chase for conventional first-lien loans nationwide in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.98 times more frequently than non-Latino whites. JPM Chase denied 46.03% of applications from non-Latino African Americans, versus only 24.46% of applications from non-Latino whites, a disparity of 1.88.
For home purchase loans, JPM Chase was even worse: non-Latino African Americans were confined to higher cost loans over the rate spread 3.14 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 2.35. JPM Chase denied 23.65% of home purchase applications from non-Latino African Americans, versus only 12.45% of applications from non-Latino whites, a disparity of 1.90.
ICP has designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on each lenders own customers. Nationwide at JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.34 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase.
New York City
In Bronx County, the lowest income (and most predominantly minority) county in New York State, JPM Chase in 2005 confined 10.78% of its borrowers to higher cost loans over the rate spread -- 14.77 times more frequently than in more affluent and less minority Manhattan, where only 0.73% of JPM Chase's borrowers were confined to rate spread loans. JPM Chase's disparity-ratio between borrowers in Brooklyn and Manhattan was almost as pronounced: JPM Chase in 2005 confined 6.64% of its borrowers in Brooklyn to loans over the rate spread -- 9.1 times more frequently than in Manhattan.
By denial rates, JPM Chase in 2005 denied 39.68% of applicants from The Bronx, and 33.37% from Brooklyn, versus only 26.13% of applicants from more affluent and less minority Manhattan. As demonstrated by the UCC filings ICP is today submitting, Chase also funds and enabled check cashers and other fringe finance in both Brooklyn and The Bronx.
Bank of New York in 2005 confined its Bronx borrowers to higher cost loans over the rate spread 7.87 times more frequently than in more affluent and less minority Manhattan. Bank of New York's disparity-ratio between borrowers in Brooklyn and Manhattan was almost as pronounced, at 6.5.
ICP is requesting public hearings and that on this record, JPMorgan Chase's application be denied.
III. JPM Chase Continues to Enable Pawnshops and Other Fringe Finance
ICP has previously shown that JPM Chase funds and enables payday lenders and pawnshops. A Bloomberg News article in late 2004 reporting on among other things ICP's proof (“JPMorgan, Banks Back Lenders Luring Poor With 780 Percent Rates,” Nov. 23, 2004), identified Morgan Chase as providing “credit to ACE Cash Express Inc. of Irving, Texas; Mr. Payday of Kentucky Inc.; and Illinois Payday Loans Inc., among others, according to Uniform Commercial Code records, which show lending relationships” -- the UCC filings ICP unearthed and raised in early 2004, including at the JPMorgan Chase-Bank One hearings. JPM Chase spokeswoman Calmetta Coleman was quoted that “[w]e have heard the concerns of consumer groups,' Coleman says.”
JPM Chase has continued funding and enable high cost lenders, including in the communities impacted by Hurricane Katrina. Attached hereto are UCC filings such as:
a Feb. 14, 2006 loan from JPM Chase/Bank One to Big Easy Pawn Shop of 4050 Chef Menteur Highway, New Orleans, Louisiana;
a Sept. 22, 2005 loan from JPM Chase "as successor in interest to Bank One" to LaPlace Pawn Shop of 105 West Airline Highway, LaPlace, Louisiana;
a November 2, 2004 loan from JPM Chase/Bank One to Sunset Cash Advance Corp. of Marion, Ohio;
a March 9, 2006 loan from JPM Chase "as successor in interest to Bank One" to JB Pawn, Inc. of Arlington, Texas;
a June 25, 2004 loan from JPM Chase/Bank One to Hilltop Pawn Shop, Inc. of Columbus, Ohio;
an October 26, 2005 continuation of a loan from JPM Chase "as successor in interest to Bank One" to National Pawn and Jewelry Sales, Inc. of Flint, Michigan;
an April 20, 2004 continuation of a loan from JPM Chase "as successor in interest to Bank One" to Great American Sales & Rent to Own, Inc. of Phoenix, Arizona;
an October 4, 2004 loan from JPM Chase/Bank One to Cliff's Check Cashing Stores, Inc. of Carrollton Texas;
a September 19, 2005 filing by JPM Chase concerning Claremont Check Cashing Co, of 510 Claremont Parkway, Bronx, NY;
a March 4, 2004 loan from JPM Chase to Grand at Lincoln Check Cashing Corp. of 153 E. 149th Street, Bronx, NY;
a September 27, 2005 filing by JPM Chase concerning Raythom Check Cashing Co, of 2430 Creston Ave, Bronx, NY;
a September 27, 2005 filing by JPM Chase concerning Money Express Check Cashing Co, of 84 West Fordham Road, Bronx, NY;
an August 18, 2005 filing by JPM Chase concerning P R Check Cashing, Inc. of 2495 Third Avenue, Bronx, NY;
a Bank of New York filing of April 8, 2004 also concerning P R Check Cashing Corp;
a Sept. 16, 2005 filing concerning Freeport Check Cashing Service of Freeport, New York, by both JPM Chase and Bank of New York; and
a December 22, 2004 loan by Bank of New York to Paradise Pawnbrokers, Inc. of 2384 Grand Concourse, The Bronx, New York.
That is, Bank of New York also funds pawnshops, including in The Bronx.
JPM Chase also engaged in bigger-picture support to payday lenders. Earlier this year Payday lender ACE Cash Express put out a press release bragging that that it has "amended its existing bank credit facility" with the involvement of JPMorgan Chase Bank is the Syndication Agent and Co-Lead Arranger. We also note that JP Morgan Chase makes secured loans to private prison companies, including the controversial Cornell Corrections Corporation.
As noted above, in the first three months of 2006, JP Morgan Chase was among the top ten securitizers of subprime loans, according to the trade publication Inside B&C Lending of April 14, 2006 -- its volume of subprime loans securitized in the quarter jumped to $6.8 billion from just $1.8 billion in the first quarter of 2005. As noted, these have included Chase Funding Loan Acquisition Trust, series 2004-AQ1, the loans in which were, according to Fitch (March 13, 2006), "originated by Argent Mortgage Company, LLC and Olympus Mortgage Company." Ameriquest recently settled charges of predatory lending for $325 million. Chase not only engages in, but also enables, predatory lending.
Another sample transaction: on August 9, 2005, much-sued tax refund anticipation lender H&R Block announced that two of its subprime subsidiaries, Option One Mortgage Corp. and Option One Loan Warehouse Corp., have amended their note purchase agreement with JPMorgan Chase Bank N.A.. The amended agreement is to extend the term of Option One Mortgage's off-balance sheet financing arrangement with JPMorgan to fund daily non-prime originations through Oct. 4, according to the filing. Under the arrangement with JPMorgan, non-prime loans originated by Option One Mortgage are sold daily to H&R's Option One Owner Trust 2003-4, which uses the JPMorgan facility to purchase the loans.
JPM Chase also buys predatory loans. CBS MarketWatch of Nov. 30, 2004, told the story of an abusive loan replete with mandatory arbitration clause made in Newark by much-sued Delta Financial, and later sold to Bank One / JP Morgan Chase, which has now started foreclosing. Here’s how the loan was made: after “a hurried knock on her front door at 10 p.m., Prince said. Despite Prince's protests that she was sick and bedridden, the broker wouldn't leave the loan paperwork for Prince to peruse later. ‘She couldn't wait,’ Prince said. ‘I just signed them so she could get out of there. She was running me crazy with it.’ Prince, unable to make the $440 loan payments on her monthly Social Security income of $1,002, is now facing foreclosure.” By JP Morgan Chase, which “is arguing in court that Prince can make no claim of predatory lending against it since it didn't originate the loan.” The bank’s “spokesman said the company could not comment on pending litigation.”
ICP is requesting public hearings and that on this record, JPMorgan Chase's application be denied.
IV. JPM Chase's Questionable SCRA Compliance, and Other Consumer Complaints
Military personnel on active duty are being overcharged on high interest loans by JP Morgan Chase, ICP's ongoing investigation of compliance with the Servicemembers’ Civil Relief Act (SCRA) has uncovered. The Servicemembers’ Civil Relief Act, at 50 USCS Appendix Section 527(1)(a) provides that “An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.”
JP Morgan
Chase’s practices, and their impact on front-line military personnel,
are reflected in the complaint online at
www.innercitypress.org/jpmcscra47a.jpg and
www.innercitypress.org/jpmcscra47b.jpg
“I am writing you from Baghdad, Iraq asking, once again, for Bank One
to drop my interest rate on these three cards to 6%. I have phoned in
and spoken with your customer service on two previous occasions, once
in May 2004 when my deployment began, and again in September 2004,
before I actually deployed to Iraq. Both times I was instructed by the
customer service that because the three accounts in question were for
Overdraft Protection, they did not qualify under the Soldiers and
Sailors Relief Act. This makes no sense to me, considering the accounts
are clearly operated like a credit card. I have used these accounts to
complete balance transfers, operate as a Visa credit card, and for
overdraft protection. It is clear that even though the account
functions as a credit card, Bank One is using the technicality of it
being classified as an Overdraft Protection to ensure that soldiers
like me cannot benefit from the Soldiers and Sailors Relief Act on
these type of accounts. I am asking you to please reconsider. The
following three accounts in question are as follows:
Account 1 [REDACTED] 13.99% interest
Account 2 [REDACTED] 28.99% interest
Account 3 [REDACTED] 13.99% interest
…In November 2004 my wife, pregnant with twins, had a miscarriage due
to increased stress from the deployment and current financial burdens.
She has also had to sell my car to help meet current financial
responsibilities. Right now, in Baghdad, I am responsible for the well
being of 117 soldiers. Everyday we are facing multiple threats every
time we leave the gate. In 60 days my soldiers and I have been hit by
31 roadside bombs. I, personally, do not have the time to get involved,
nor do I need to be worrying about the bills back home.”
Another complaint about Chase, submitted to the White
House / Andrew Card:
“I cannot tell you how much my husband and I appreciate your
willingness to look into this situation…We have met with resistance
from certain companies in regard to them helping during this crisis.
They disregard the mandates under the SSCRA and have done out of their
way to harass us.
“Chase NA credit card has been the worst of these companies. They not
only refuse to lower our interest rate to 6%, but actually raised it
from 15% to an unbelievable 22.99%.”
This is indicative of the JPM Chase practices on which ICP is timely requesting hearings. Here are other sample consumer complaints, including from the Katrina Zone:
Subject: Chase Home Finance
Date: 12/6/2005 3:03:58 PM Eastern Standard Time
From: [Name withheld]
To: JPMChaseWatch [at] innercitypress.org
My home is located in Hancock County Mississippi. Hurricane
Katrina devastated southern Hancock County causing over 90% of homes
and businesses catastrophic damage. My home was one with
catastrophic damage.
Shortly after the hurricane I contacted Chase to inquire about payment
options. I was told that based on the damage and my federally
declared zip code that I would not have to make payments for three
months. In December I was to assume payments and the months of
September, October and November 2005 would be added to the loan without
penalty. On September 29 I received a bill from chase detailing
my missed payment as past due. I called and spoke to a
representative named Andrew who assured me the bill was automatically
computer generated but that the system did not identify my loan as
late. I again called in October and November when I received
my bills. I was told the same thing. On November 22 I
received a letter from chase requesting information about intent to
rebuild. Again I called, again I was reassured that my credit
would not be affected and I would owe but one payment in December.
Today, December 5, I called to make my scheduled payment and was
told that not only do I owe four months of payments but that I would be
reported to the credit borough starting January if not paid.
I asked to speak to a supervisor who told me that Chase made the
decision not to honor full deferrals on November 1, 2005 and anyone I
spoke to after that misinformed me. Between November 1 and
November 29 I had no less than six conversations with Chase
Representatives; all of them assured me I was fine. The
supervisor advised me that payment plans were being set up to bring
people current with their mortgages but I do not qualify for such since
I am unemployed (Katrina destroyed my place of employment as
well). She told me to make my December payment and call back in
January. She could offer no assurance that my credit then would
not be affected if I am unable to come up with the almost $4000 it
would take to make me current.
I have four children, my home is destroyed, my insurance company is not
paying for damages, I am unemployed and I feel I have been deliberately
misled by Chase. I was told one thing and at the last
moment everything regarding my loan changed.
Then --
Subject: Chase Home Finance
Date: 1/11/2006 3:12:40 PM Eastern Standard Time
From: [Name withheld]
To: JPMChase-Watch [at] innercitypress.org
I wrote in on Dec 5 detailing some of my "Chase Story". Just a
quick update. Chase has begun the foreclosure procedures on my
home. They are threatening to take what is no longer there.
I have received letters stating that my home has been
inspected and appears to be unoccupied; that they will secure the
property, change the locks and winterize at my expense if I do not
contact them immediately.
First: Since Katrina, I have spoken with a Chase representative
at least once a week.
Second: From August 30, I was repeatedly assured my loan
was deferred and in good standing, that payments would resume in
December. (They neglected to inform me of their change of policy
on November 1 despite several phone calls from November 1 to December
1.) Third: I have, again, repeatedly, informed Chase
of the structural status of the property. Each time I speak with
them I have to tell them that NO the home is not habitable.
Fourth: Whomever inspected the property should not be on the
payroll. There are no walls! There are no doors!
There was no roof until a week ago! What exactly are they going
to winterize? 2x4s??
I have managed to hold the foreclosure process off for another
month by paying, in addition to my monthly mortgage, a large sum of
money. Friends in the area tell me that mine is not the only loan
Chase has taken this approach with. They have us. The
options are, follow the original payment plan agreed to shortly after
the storm and have your credit ruined because they will report you for
non payment and/or foreclose on the loan; or do it their way and put
out funds that could and should be directed toward rebuilding the very
properties they threaten to take. The people in this area have
lost everything. Everything. If your good credit is all you
have left, holding on to it is going to be paramount to your
future. How is it that Chase has the power to take what is
left? They did not inform of their change in policy, will answer
to no one about this, and in the end will profit from the loss of those
most affected by the largest natural disaster in US history.
And --
Subject: Chase Horror story
From: [Name withheld]
To: JPMChase-Watch [at] innercitypress.org
Sent: Fri, 28 Oct 2005 14:40:27 -0500
I have found your site and find it interesting that Chase Manhattan
Mortgage Company (CMMC) has treated other customers with such disdain.
Our story starts in the fall of 2002 after my retirement from the Air
Force (the house was purchased in 1999) I was having a hard time
finding a new job, and my income had been cut by 2/3rd''s. We
contacted Chase to let them know what was going on in October, and to
find out what we would need to do for assistance - we were told that
until we were 60 days late on payments they could not assist - this was
a situation we were trying to avoid for obvious reasons.
In December 02 I found work in Oklahoma City, and put our house in San
Antonio up for sale or rent - we were able to make both payments
through April 03 even though the house was sitting vacant.
I the mean time we contacted Chase on several occasions letting them
know we had moved and that finances were getting worse and unless we
sold or rented the house we would have problems soon. After the
April payment we could not continue the dual rent/mortgage and let
Chase know and again we were told that until the 60 day point we could
not receive help, what we were trying to do was save our credit and
either refinance or restructure the note, or pay just interest on the
house for a few months placing the payments at the end of the note.
In May the house was rented for $800 per month, but due to work that
had to be done we did not receive any monies until July and then it was
only a partial payment - we told Chase what had transpired and that if
they would work with us we would put all of the rent monies toward the
mortgage (it was $100 a month less than the mortgage) and pay the
difference if we could work out something with the missed
payments. We put this in a written request as directed by Chase;
we were turned down the first time because they did not include my
current salary it only took a few days.
We re-requested as we were told since the first request had been closed
and a new process had to be opened; they told us to collect the monies
from the rent and save it until the request was approved and we did
just that - placed the monies back to pay Chase when the request was
answered. The second request took from June until August to be
denied - it was denied due to us being behind in the mortgage more than
60 days.
When we contacted them we were told that we needed to re-submit again
and continue to save the monies from the rent - again we complied.In
August we asked the renter is they would like to buy the house - and we
would let them take over payments of our VA note (they had VA
eligibility). We contacted Chase and told them what we were
trying to do - Chase in turn called the renters and told them they
would have to pay the past due payments as well as penalties before
they could assume the note (almost $10K - 4 months @ $900) - Chase had
not told us that would be required nor had they asked us for the past
payments since we had a request in with them for
assistance. The sale fell through after Chase contacted the
renters.
In September/October we went to the realtor and we had brokered a deal
to have the house sold outright for the payoff of the note ($69K on a
$79K house). This time Chase called the buyers and told them we
were filling bankruptcy and the house would be tied up for years - you
might wonder how we know this: When Chase called in October to let us
know that our request had been denied for the third time they told my
wife they had called the buyers and informed them we were filling
bankruptcy (this is not a he said she said - we were by that time
recording all our calls from Chase and have the tape to back it
up). This caused the sale to fall through and this was the
second sale Chase purposefully caused to fall through.
We continued to try working with them until January 2004 - at that time
the renters moved out due to the harassment from Chase (they had gone
out to inspect the property and force their way in telling the
occupants that the police would be called if they were not allowed in
at that time) they had called them for payments - this is hearsay
because our realtor told us what happened; just a note we at no time
saw or spoke to the renters all communication was through the realtor.
With the loss of the renters and with Chase's determination to prevent
a sale of the house we filled for bankruptcy on January 12, 2004 -
Chase continued to try to collect from us through June 2004 even though
the bankruptcy was finalized on 4 April 2004. We would receive
certified letters from Chase which we would turn copies over to our
attorney for future use. Our lawyer would not file against Chase
as he was too small and the house was in Texas not Oklahoma.
In the end we lost the house and had to file bankruptcy over just a few
months worth of mortgage payments - even the VA was in disbelief of how
Chase was operating but they did not have the authority to force
co-operation. The VA approved our request for reworking the loan
and Chase would not work with us at all. Yes I can believe any of the
items I read about Chase...And this story does not include their credit
card, I have on tape where they admit calling me ten minutes apart and
disclosing my account information to my brother.
This too is indicative of the JPM Chase practices on which ICP is timely requesting hearings.
V. JPMORGAN CHASE HAS DIMINISHED THE SERVICE TO COMMUNITIES, PARTICULARLY LMI NEIGHBORHOODS AND PEOPLE OF COLOR, AFTER PREVIOUS MERGERS
Once upon a time -- in the last decade, actually -- in New York City many large banks competed with each other in providing retail banking and lending services. These included Chemical Bank, Manufacturers Hanover Bank, Bank of New York and Chase Manhattan Bank. In 1992, Bank of New York bought 60 branches of Barclays Bank, and in response to challenges from ICP, moved to extend its Community Reinvestment Act assessment area to include The Bronx, Harlem and Brooklyn. The other above-named New York City banks consolidated, then in desperation bought the investment bank J.P. Morgan, and then the Midwest's Bank One. As ICP will further show at the requested public evidentiary hearings, JPM Chase has grown worse and more disparate after each previous acquisition, including through branch closings and service reductions. See, e.g., "The group said the South Bronx in particular had been underserved by Chase, with only one-fifth of the bank's mortgage applications in the Bronx coming from the South Bronx. And it said that of Chase's 15 branches in the Bronx, only 2 were in the South Bronx." New York Times, November 5, 1994.
Rather than appropriately serve the South Bronx and communities like it, the next step was the merger of Chase and Chemical, resulting in the closure of 100 branches, 12 in The Bronx. While Chase said that only seven of its 100 named branch closings explicitly related to the Chemical merger were in low- or moderate-income neighborhoods, this turned out not to be true. See, e.g., N.Y. Daily News, September 3, 1996 (The Toll: City Will Lose 4,000 Jobs; 100 Area Banks to Close): "Branches: one hundred will close. They include... neighborhood branches in Jackson Heights, Queens, and Gun Hill in the Bronx. Chase says only seven targeted branches are in poor neighborhoods. But [ICP] a South Bronx group that's battling the merger, says that is misleading. 'Technically, Jackson Heights, Gun Hill and several other branches are in middle-income neighborhoods, but they're just blocks away from low-income communities, so they adversely impact the poor who use those banks,' [ICP] said." As the New York Banking Department (NYBD) soon realized (after these and other comments), numerous others of the closings were in technically middle income census tracts, surrounded on all sides by low- or moderate-income tracts. In fact, Chase's duplicity lead to the NYBD changing the format of its branch closing question, to include branches adjacent to LMI tracts. Over 10,000 people were laid off; Chase aggressively fought off litigation alleging racial and age discrimination in the lay-offs. See, e.g., BERTUZZI v. CHASE MANHATTAN BANK, N.A., QDS:02761641.
More recently, similar discrimination has been alleged at JPMC's Bank One. See, e.g., "Age-bias suit must go to trial, judges say," Columbus Dispatch, March 1, 2006. The problems are not only bias: in mid-2004, a case was filed in U.S. District Court in Houston, alleging that for the past three years, hourly employees at Chase call centers across the country were expected to perform unpaid tasks before and after their shifts so they could spend most of their shifts taking calls from customers. Employees routinely were required to perform setup and cleanup tasks before and after their shifts without pay, the suit stated.
These are all adverse managerial factors under the applicable statute, on which ICP is requesting public hearings.
There are other adverse managerial issues. From Dow Jones of August 9, 2004: J.P. Morgan Chase, its subsidiaries and three current or former employees have been named as defendants in a series of lawsuits stemming from the company's work with a now-bankrupt firm, according to J.P. Morgan's quarterly report filed late Monday with the Securities and Exchange Commission. The 13 suits, which were filed in or transferred to the U.S. District Court for the Southern District of Ohio, stem from the November 2002 bankruptcy of National Century Financial Enterprises Inc. The plaintiffs, who include institutional investors that purchased more than $2.7 billion of asset-backed securities issued by National Century, accuse J.P. Morgan and its affiliates of not doing enough to reveal National Century's financial structure and problems to investors, according to the filing. The suits also name as defendants National Century's founders and executives, its auditor and outside counsel, and ratings agencies and placement agents that were involved in issuing notes to institutional investors. J.P. Morgan said that motions to dismiss the suits are pending. Before its bankruptcy, National Century provided financing to various healthcare providers through its special purpose vehicles. The entities bought discounted accounts receivable to be paid under third-party insurance programs, and financed those purchases primarily by private placements of notes to institutional investors. J.P. Morgan Chase Bank was the indenture trustee for one special purpose vehicle, NPF VI, which issued about $1 billion in notes, the filing said. A unit of Bank One (ONE), which recently was acquired by J.P. Morgan, was the indenture trustee for another special purpose vehicle that issued about $2 billion in notes. The lawsuits assert that the trustees "violated fiduciary and contractual duties, improperly permitted NCFE and its affiliates to violate the applicable indentures and violated securities laws by (among other things) failing to disclose the true nature of the NCFE arrangements," J.P. Morgan said. The three current or former employees, whom J.P. Morgan didn't identify, were named in the lawsuits because they sat on National Century's board of directors, according to the filing." As we’ve noted, they include... Hal Pote, one-time supposed retail wunderkind, now presiding over loans to payday lenders. Continuing: "The employees allegedly controlled the board and audit committees of the National Century entities. The lawsuits assert that the employees "were fully aware or negligent in not knowing of NCFE's alleged manipulation of its books and are liable for failing to disclose their purported knowledge of the alleged fraud to the plaintiffs. "In addition, the lawsuits allege that Banc One Capital Markets Inc., which was co-manager for three note offerings made by a National Century vehicle, "is liable for cooperating in the sale of securities based on false and misleading statements."
On January 12, 2005, Morgan Chase’s Banc One Securities Corp. was fined $400,000 by the National Association of Securities Dealers for failing to supervise brokers to prevent the illegal late trading of mutual fund shares and that it falsely recorded customer orders. The NASD said it was the largest fine ever imposed for a lapse of that nature.
In December 2005, Chase Investment Services Corp. paid $290,262 to resolve regulators' allegations that it failed to prevent improper trading in mutual funds by a favored client that used ruses to circumvent funds' restrictions. The NASD on December 13 announced the settlement over allegations of failing to prevent improper trading in mutual funds and market-timing abuses. The NASD said Chase lacked an adequate supervisory system and controls to prevent the hedge fund from trading in certain mutual funds that had barred it and from continuing to engage in market timing in those funds. From at least February 2002 through April 2003, the regulators said, Chase received notices from 19 mutual funds barring the hedge fund from any future trading in the funds because an excessive number of trades by the hedge fund had been detected. Chase failed to monitor the accounts of the hedge fund to ensure that the trading bans were enforced, according to the NASD…
Just last month, JPMorgan Chase said it will pay $425 million to try to settle the three-year-long dispute about the bankrupted National Century Financial Enterprises, on whose board of directors three Chasers served. The 8K also said that the SEC's staff is considering whether or not to recommend civil charges against JPMorgan Chase and two of the current or former employees who had served on National Century's board... Also, on March 9, 2006, Japan's financial watchdog penalized the Tokyo branch of J.P. Morgan Securities Asia for breaking the securities laws. The Financial Services Agency ordered the Tokyo branch to suspend part of its stock-futures trading between Friday and March 31 because the company manipulated futures contracts.
BusinessWorld (Philippines) of February 4, 2004, reported that "the central bank yesterday reiterated its call for banks to document the sale of foreign exchange worth more than $5,000. In a statement, Bangko Sentral said documentation should indicate the purpose of the foreign exchange - whether for business, education or medical reasons. 'Original invoices/receipts should be presented to justify them,' it said. It also reminded banks that foreign currency deposit unit (FCDU) transactions over more than $10,000 must be reported to the Anti-Money Laundering Council as covered transactions. Meanwhile, the central bank clarified that the three banks earlier reported to have breached foreign exchange rules committed the violation... it said of J.P. Morgan Chase."
In environmental (hypocrisy) news, consider this notice: “On September 1, 2005, J.P. Morgan Chase & Co 's holdings amounted to 4.91 percent of the paid up share capital of Metso Corporation... Metso is a global technology corporation serving customers in the pulp and paper industry, rock and minerals processing, the energy industry and selected other industries.”
In October 2005 it emerged that JPMorgan Partners is collaborating with Cub Energy LLC to acquire gas processing and gathering assets from Hanover Compressor Co. for $50 million, and then expand capacity at the site.
In mid-2005, JP Morgan Chase put out a press release purporting to report on its performance under its Bank One-merger related lending pledge. The press release referred to “loans to families and businesses located primarily in low- and moderate-income communities.” But how can a family or business be “primarily” located in an LMI census tract? The answer is that the pledge include all mortgages made to people at or below the median income - hardly “low and moderate income.” The press release apparently refers to everyone at or below the median income as “lower income.” So much for transparency. It is imperative that this be clarified, in connection with this proposal, along with specifics of the branches to be closed, and the issues above. On branches, note that the American Banker newspaper of April 11, 2006, reported that JPMorgan Chase "has already identified about 50 that it would probably shut... It had intended to open 50 in the city this year, but that plan will be scaled back because of the Bank of New York deal, Mr. Scharf said." These branches must be identified and the consumer impacts assessed, prior to and at the requested public hearings.
For the reasons set forth above, your agency should schedule and hold public hearings on JPMorgan Chase's proposal and applications, and, on the current record, your agency should stop / deny the proposed acquisition. If you have any questions, please immediately telephone the undersigned at (718) 716-3540. Thank you for your attention.
Respectfully submitted,
Matthew Lee, Esq.
Executive Director
Update of April 10, 2006: The 2005 Home Mortgage Disclosure Act data, which Inner City Press / Fair Finance Watch received in late March from JP Morgan Chase, reveal that, considering all conventional first-lien loans, JPM Chase in 2005 confined African Americans to rate spread loans 2.98 times more frequently than whites. The Federal Reserve has defined higher-cost loans as those loans with annual percentage rates above the rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.
While comprehensive income comparisons will not be possible until the aggregate data is released in September, ICP / Fair Finance Watch has designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on each lenders own customers. Nationwide at JPM Chase for conventional first-lien loans, upper income African Americans were confined to higher cost loans over the rate spread 3.34 times more frequently than whites. Income does not explain the disparities at JPM Chase. More analysis will be forthcoming. For or with more information, contact us.
Update of April 3, 2006: Heard at the Detroit Economic Club last week: "If you listed the top 10 banks in 1990, five of those 10 would be part of JP Morgan Chase." While it was said as a boast, others find it troubling, The speaker was Richard Manoogian, CEO of Masco Corp., who introduced Jaime Dimon to a crowd in Cobo Hall. According to a noshing FT profile, Dimon flies further east to Chicago on the weekends, strums guitars while dreaming of steak tartare and buying yet more banks. Asked in Detroit about strikes, he said: "A GM bankruptcy would be a disaster and ripple through the economy longer and farther than anyone realizes. Are we worried? Yes. Can we withstand it? Yes. No one company is going to sink us."
Update of March 27, 2006: From Fortune magazine of April 3, the reminder that JPM Chase CEO Dimon worked at the seedy subprime lender Commercial Credit (along with another now-Chaser, Charlie Scharf, quoted that "Jamie's... not a classic manager," says Charlie Scharf, who started with Dimon at Commercial Credit in the 1980s and is now head of retail banking at J.P. Morgan." Subprime suffused... Sandwich, too -- from the department of They-Buy-The-Strangest-Things, on March 20 J.P. Morgan Partners announced it will become an ownership partner in Quiznos, they of toasted subs...
United States anti-money laundering, or at least FinCEN, has devolved into a revolving door. Two months after Bill Fox cashed out to Bank of America, now FinCEN's William D. Langford jumps to JP Morgan Chase. “I have an absolutely incredible opportunity with an incredible institution – it’s that simple,” Langford said in a telephone interview. Again - if the Treasury Department's OCC has adopted anti-revolving door safeguards in the wake of the Riggs Bank scandal, why hasn't FinCEN?
Update of March 20, 2006: Thriving on conflict(s of interest), JPM Chase has stepped down from helping NASDAQ to bid on the London Stock Exchange (which its Cazenove unit also advises). Did the same thing on Pernod Ricard in its acquisition of Allied Domecq -- cheers!
Update of March 13, 2006: JPMorgan Chase says it will pay $425 million to try to settle the three-year-long dispute about the bankrupted National Century Financial Enterprises, on whose board of directors three Chasers served. The 8K also said that the SEC's staff is considering whether or not to recommend civil charges against JPMorgan Chase and two of the current or former employees who had served on National Century's board... Also, on March 9, Japan's financial watchdog penalized the Tokyo branch of J.P. Morgan Securities Asia for breaking the securities laws. The Financial Services Agency ordered the Tokyo branch to suspend part of its stock-futures trading between Friday and March 31 because the company manipulated futures contracts.
Update of March 6, 2006: Payday lender ACE Cash Express last week put out a press release bragging that that it has "amended its existing bank credit facility" with the involvement of JPMorgan Chase Bank is the Syndication Agent and Co-Lead Arranger.
Update of February 27, 2006: They also hold some German things: on Feb. 24, notice was given that JPMorgan Chase holds 5.05% of German company Software AG, through JPMorgan Asset Management Holdings Inc... Get ready for the hype: on Feb. 28 from 8 to 3, the Chasers will praise themselves, and reportedly take questions, www.jpmorganchase.com under Investor Relations, Investor Presentations.
Update of February 20, 2006: In continuing Morgan Chase over-lobbying news, JPMorgan Chase & Co. has named Emily Altman as a managing director and its head of international government relations, reporting to Slick Rick Lazio… The company also added Rob Griner as a vice president of government relations in its D.C. office. Mr. Griner, was chief of staff to Rep. David Scott, a member of the House Financial Services Committee. Ah, the revolving door…
Yes they buy the strangest things: as broken by Robin Sidel on Feb. 13, J.P. Morgan Chase & Co., which already does business with more than 1,000 hedge funds, now wants to do their paperwork. The third-largest bank in the U.S. based on market value, after Citigroup Inc. and Bank of America Corp., has agreed to buy the administrative and processing businesses of Paloma Partners Management Co., a Greenwich, Conn., hedge fund…Update of February 6, 2006: In the run-up to Super Bowl XL in Detroit, Inner City Press / Fair Finance Watch has analyzed mortgage lending patterns in the Detroit Metropolitan Statistical Area in the most recent year for which data is available, 2004. At Chase Manhattan Mortgage Corp., American Americans were over 6.7 times more likely to be confined to higher cost loans than whites, and Hispanics were over 2.9 times more likely to be confined to higher cost loans than non-Hispanic whites…
Updated February 13, 2006: When Chase’s CEO starts ranting at stock analysts by name, they’ve nearly hit bottom… Like a lemming: JPMorgan Chase last week agreed to sell Chase Insurance Group to Protective Life Corp. for $1.2 billion in cash, “following rival Citigroup Inc. out of underwriting life insurance.” Yep – following. For or with more information, contact us.
Update of January 30, 2006: High-cost cards on steroid (or, “supplements” – JPM Chase last week started is issuing a cobranded card with Herbalife Ltd., a provider of “nutritional supplements, weight management, and personal care products.” The Herbalife Visa cards are being distributed through Herbalife independent distributors in the United States. And how will JPM Chase monitor the sales practices and disclosures? We’ll see…
Update of January 23, 2006: On JPM Chase’s earnings conference call last week, Dimon said that improvements in credit card lending and trading will have to wait for yet another year. "We are working hard to get there in Oh-Seven," he said. "By implication, we won't be there in Oh-Six.” Great merger… Down in Chase’s subprime mortgages, there are changes afoot. According to Origination News, “Chase has decided to lump its prime and subprime businesses under one roof, designating specific chiefs for retail and wholesale.” They had already blurred the lines in their Home Mortgage Disclosure Act reporting…
Update of January 17, 2006: Welcome to the fun house – last week, a hedge fund owned by JPM Chase, Highbridge Capital Management, bought a major stake in the theme park chain Six Flags Inc., whose ex-ESPN board member Mark Shapiro said-in-a-statement,
"We want to be about more than rides -- Six Flags must be about a wider, more fulfilling experience.” Sort of like Chase…
More – or most – seriously, this is a follow-up from the Gulf Coast
Subject: Chase Home Finance
Date: 1/11/2006 3:12:40 PM Eastern Standard Time
From: [Name withheld]
To: JPMChase-Watch [at] innercitypress.org
I wrote in on Dec 5 detailing some of my "Chase Story". (Posted on Dec
12). Just a quick update. Chase has begun the foreclosure
procedures on my home. They are threatening to take what is no
longer there.
I have received letters stating that my home has been inspected
and appears to be unoccupied; that they will secure the property,
change the locks and winterize at my expense if I do not contact them
immediately.
First: Since Katrina, I have spoken with a Chase representative at
least once a week.
Second: From August 30, I was repeatedly assured my loan was
deferred and in good standing, that payments would resume in
December. (They neglected to inform me of their change of policy
on November 1 despite several phone calls from November 1 to December
1.)
Third: I have, again, repeatedly, informed Chase of the
structural status of the property. Each time I speak with them I
have to tell them that NO the home is not habitable.
Fourth: Whomever inspected the property should not be on the
payroll. There are no walls! There are no doors!
There was no roof until a week ago! What exactly are they going
to winterize? 2x4s??
I have managed to hold the foreclosure process off for another month by
paying, in addition to my monthly mortgage, a large sum of money.
Friends in the area tell me that mine is not the only loan Chase has
taken this approach with. They have us. The options are,
follow the original payment plan agreed to shortly after the storm and
have your credit ruined because they will report you for non payment
and/or foreclose on the loan; or do it their way and put out funds that
could and should be directed toward rebuilding the very properties they
threaten to take. The people in this area have lost
everything. Everything. If your good credit is all you have
left, holding on to it is going to be paramount to your future.
How is it that Chase has the power to take what is left? They did
not inform of their change in policy, will answer to no one about this,
and in the end will profit from the loss of those most affected by the
largest natural disaster in US history.
Update of January 9, 2006: They buy (into) the strangest things. Here’s a company of which JPM Chase holds just below 5%: Metso Corporation, which describes itself as a global engineering and technology corporation serving customers in the pulp and paper industry, rock and minerals processing, the energy industry and selected other industries. Does JPM Chase vouch for (or scrutinize) Metso’s environmental policies and impacts?
Update of January 3, 2006: Continuing its buying (of influence) through the revolving door, JPM Chase has hired Steve Patterson, Sen. Jim Bunning's Banking Committee aide since 1999, as a vice president of government relations. He’ll be calling in favors in the Washington office for federal government relations co-heads Stephen Ruhlen and Naomi Camper.
Inner City Press / Fair Finance Watch (ICP) opposed -- and opposes -- J.P. Morgan Chase's merger with Bank One Corporation. See, e.g., "Chase - Bank One Merger Review Airs Dirty Laundry," by Russ Wiles, Arizona Republic, June 27, 2004, Pg. 4D; "Merger Menace: A David Takes on Banking Goliaths," by David Weidner, CBS.MarketWatch and AFX.com, April 23, 2004; "J.P. Morgan Makes $800 Billion Pledge," by Jennifer Harmon, National Mortgage News, April 19, 2004, Pg. 2; "Critics Voice Concerns on Takeover of Bank One," by Leon Lazaroff, Chicago Tribune, April 16, 2004; "Banks Make $800 Billion Promise: Bank One, J.P. Morgan Chase unveil community aid; merger hearings start," by Ken Stammen, Columbus Dispatch, April 16. 2004; "JPM Chase Makes CRA Pledge; Faces Merger Scrutiny," by Liz Moyer, American Banker, April 16, 2004, Pg. 18; "JP Morgan, Bank One To Help Poor Communities," Associated Press, April 15, 2004; "Fed Urged to Block JP Morgan/Bank One Merger," by Victoria Thieberger, Reuters, April 15, 2004; "Group Opposes Bank One Sale: Business with Predatory Lenders a Concern," by Ken Stammen, Columbus (Ohio) Dispatch, April 15, 2004, Pg. 1E; "Jesse Jackson [et al.] Due at JPM-Bank One Hearing," by Damian Paletta, American Banker, April 12, 2004, Pg. 2; "Hearing Set for Chase - Bank One Merger," by Eileen Alt Powell, Associated Press, April 11, 2004; "J.P. Morgan Draws the Line on More Low-Income Lending; Activists Hope to Delay Bank One Merger, " by Tom Fredrickson, Crain's New York Business, April 5, 2004, Pg. 4; "Activists Demand Forum On JPM-Bank One Deal," by Liz Moyer, American Banker, March 26, 2004, Pg. 2; "Now It's JPM Wrestling a Deposit Cap -- In Texas," by Liz Moyer, American Banker, March 1, 2004, Pg. 1; "J.P. Morgan Merger Slammed," by Nancy Dillon, New York Daily News, February 24, 2004, Pg. 67; "Grievance Against JPM / Bank One Deal," American Banker, January 23, 2004, Pg. 3; "Consumer Group Protests Bank Deal; Cites concerns for minority and low-income customers," by Kelly Quigley, Crain's Chicago Business, January 22, 2004; "No Welcome Wagon from Activists for This Deal," by Damian Paletta, American Banker, January 16, 2004, Pg. 4. On February 23, 2004, ICP filed even more detailed comments. J.P. Morgan Chase, which is a top-ten subprime lender