The J.P. Morgan Chase Watch - from Inner City Press & Fair Finance Watch

The J.P. Morgan Chase Watch

Click here for Inner City Press' weekday news reports, from the United Nations and elsewhere.

Updated July 19, 2010 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 July 19, 2010: A securities arbitration panel ordered J.P. Morgan Securities to pay a customer more than $2 million, including sanctions... A Financial Industry Regulatory Authority arbitration panel in Richmond, Va., awarded $1.8 million, plus interest from May 2008. The Finra panel also made an additional--and rare--award of sanctions in the form of $218,000 in legal fees, $25,000 in expert witness fees, and $9,000 in costs, according to the award, dated July 8. It found that J.P. Morgan and its lawyer, Stephanie Karn of Richmond, Va., allegedly weren't "wholly forthcoming.”

Why are we not surprised?

Update of June 28, 2010: J.P. Morgan Chase turns big profits by trading foreign currencies and the legislation's language has thrown that business into question.

Update of June 21, 2010: Fighting the Volcker rule is J.P. Morgan Chase, owner of hedge-fund manager Highbridge Capital Management...

Update of June 14, 2010: The largest shareholder in BP? JPMorgan Chase, they of mountain top removal mining...

Update of June 7, 2010 -- So JP Morgan Chase was hit with the UK FSA's largest fine ever, for blending its own money with that of clients. Why are we not surprised?

Update of May 24, 2010

Protests of JPM Chase on Wall St, of Predatory Loans and Mining, Laissez Faire

By Matthew R. Lee

WALL STREET, May 18 -- Of the Big Four American bank, JPMorgan Chase has perhaps benefited more than any other from the financial meltdown. While having securitized many and made some of the most predatory mortgage loans, it was given Bear Stearns, and then Washington Mutual on the cheap. It proceeded to close scores of WaMu branches.

Tuesday in lower Manhattan outside JPMorgan Chase annual shareholders meeting, environmentalists sang songs about the bank's support of mountain top removal mining. As Inner City Press has reported, JPMorgan Chase pays former UK prime minister Tony Blair as an environmental consultant.

The bank's security officers handed out leaflets about less than living wages from Chase's subcontractors Allied Barton and Summit Security. A protest of predatory lending by Chase was right around the corner, including NYRL, CRA-NC and, in from West Coast including wtih wronged borrowers, the California Reinvestment Committee. "What do we want? No redlining! When do we want it? Now!"

Fair Finance Watch got an early copy of JPM Chase's 2009 mortgage lending on disk. Its analysis, the first in the country, found that in 2009 JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost mortgage loans as defined by the Federal Reserve 1.98 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.17.

Still Chase and its CEO Jaime Dimon lobby against regulatory reform, and call it unfair that they are tarred with the stigma of the bailout they accepted. Dimon's speech last weekend at Syracuse University was protested, although some spun it as a success, with cheers for his commencement speech about free thinking. Laissez faire is more like it. Private profits, socialized risk.

JPMorgan Chase helped cause the collapse of Lehman Brothers Holding Inc. by demanding more collateral and changing guarantee agreements, the bankruptcy examiner said last week. “The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool,” said Anton Valukas, the U.S. Trustee-appointed examiner, in a 2,200-page report filed in federal court, also in lower Manhattan.

Footnote: Simultaneous with the protest and shareholders' meeting, Chase's previous Community Reinvestment Act officer organized a CRA breakfast talk. At least two activists were asked to skip the protest in order to speak, but declined. Willis is known to oppose any legislation to expand CRA to cover, for example, investment banking including the securitization of subprime mortgages.

Rather, he is promoting a more limited regulatory fix to CRA, on such matters as expanding the areas in which banks are assessed. Whether legislators like House Banking Committee chair Barney Frank, who argued CRA should not be under the Consumer Financial Protection Agency, will now move forward with the CRA modernization bill is not yet known. Watch this site.

Update of May 17, 2010: J.P. Morgan Chase has removed itself from the running for RBS Sempra's energy-trading and retail-energy-supplier businesses, largely because of expectations of a "Volcker Rule" that would force banks to exit from proprietary-trading businesses. Good. There will be a protest May 18...

Update of April 26, 2010: FOIA, and Citigroup's cheapskatery leading to JPMorgan Chase's gain, in the news: Citigroup Inc.'s unsuccessful bid for the teetering banking operations of Washington Mutual Inc. proposed that the U.S. government absorb a majority of the thrift's loan losses and limited Citigroup's financial exposure to $10 billion, according to a document released by regulators. Terms of the offer by the New York bank previously were kept secret by the Federal Deposit Insurance Corp., which sold the failed banking units to J.P. Morgan Chase & Co. for $1.88 billion in September 2008. The document was disclosed following a Freedom of Information Act request...

Update of April 19, 2010: Three former JPM Chase executives Denis O'Leary, Stephen Rotella and Harry DiSimone have formed Encore Financial Partners, funds raised by Goldman Sachs, to "target" U.S. based banks...

Update of April 12, 2010: In the first study of the just-released 2009 mortgage lending data, Inner City Press / Fair Finance Watch has found that JPMorgan Chase confined African Americans to higher-cost loans above the Federal defined subprime rate spread 2.17 times more frequently than whites. JPM Chase confined Latinos to higher-cost loans above the rate spread 1.98 times more frequently than whites, the data show. 2009 is the sixth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread. Further studies will follow.

Update of April 5, 2010: JPM Chase's Dimon remains both arrogant and evasive. "'For JP Morgan Chase, it was not a question of access or need–to the extent we needed it, the markets were always open to us–but the program did save us money,' Dimon said. J.P. Morgan stopped using the guarantees in April 2009 because 'it just added to the argument that all banks had been bailed out and fueled the anger directed toward banks.' Dimon d idn’t say how much the bank saved from the FDIC’s lending program." Why not?

Update of March 22, 2010: The 2d Circuit Court of Appeals has upheld the slap down of the Federal Reserve for withholding information about a portfolio of securities supporting a loan extended by the Fed in connection with J.P. Morgan Chase & Co.'s acquisition of Bear Stearns...

Update of March 15, 2010: JPMorgan Chase helped cause the collapse of Lehman Brothers Holding Inc. by demanding more collateral and changing guarantee agreements, the bankruptcy examiner said last week. “The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool,” said Anton Valukas, the U.S. Trustee-appointed examiner, in a 2,200-page report filed in Manhattan federal court. “Lehman’s available liquidity is central to the question of why Lehman failed.”

Update of March 8, 2010: JPM Chase is among the two biggest RAL lenders. Rather than publicly or even privately urging these big banks to stop RALs -- as even the FDIC has done with smaller institutions like Republic -- the OCC issued a vague policy guidance that provides no penalties, http://www.occ.gov/ftp/bulletin/2010-7a.pdf While JPM Chase claims its fees are clear -- $32 plus one percent of the loan -- it also has a $10 technology access fee. This is a trillion dollar institution, engaged in usurious lending. And the band played on..

Update of March 1, 2010: Bottom feeding subprime lender World Acceptance, charging interest rates up to 215%, is enabled by credit lines from JPM Chase, among others. It feasts off repeated refinances and roll overs, using the rule of 78s to fleeces its borrowers. Does Chase have any standards for the subprime lenders they will lend to? JPM Chase was previously exposed by Inner City Press / Fair Finance Watch for extensive lending to pawn shops and high cost check cashers. Even post crisis, the sleaze just continues. Watch this site.

Update of February 22, 2009: Why are we not surprised, about JPM Chase? "A federal judge has rebuked J.P. Morgan Chase & Co. for taking part in an what he called an "end run, if not a down right sham" in the way it arranged a $225 million loan deal for Mexican telecom company Empresas Cablevisión SAB. In a ruling unveiled late last month in U.S. District Court in Manhattan, Judge Jed Rakoff said the New York bank structured the deal so it would have allowed a major competitor of Cablevisión to gain confidential information about the company, which is Mexico's largest cable-television operator. That competitor, Telmex Internacional SAB, is owned by Mexican billionaire Carlos Slim."

Update of February 15, 2010: annual reports say J.P. Morgan has $18.4 billion in exposure to Spain....

Update of February 1, 2010: At J.P. Morgan Chase, total buyback demands from the GSEs surged to $5.3 billion in 2009 from $4 billion in 2008, according to Barclays Along with the WaMu acquisition, the sleaze is growing.

Update of January 25, 2010: So where will the financial crisis commission head, with the answers given by Jaime Dimon?

Update of December 7, 2009: In repurchases from Fannie Mae and Freddie Mac, J.P. Morgan, as of the third quarter, had $1.1 billion set aside to meet repurchase claims from investors, including those from Fannie and Freddie, because of problematic underwriting. The repurchase reserve "won't run at that high level," claimed Michael Cavanagh, J.P. Morgan's chief financial officer, in October during the quarterly earnings conference call, but "looking ahead it will still be something though." Yep...

Update of November 15, 2009 --

As Blair Lobbies for Wataniya, Do Kuwait and JPM Chase's Arranger Role Spell UN Conflict of Interest?

By Matthew Russell Lee

UNITED NATIONS, November 13 -- When Tony Blair does business, who does he work for? He represents the Quartet, and thus the UN, on development in the Occupied Palestinian Territories. He has been paid by JPMorgan Chase as a consultant, and presumably works for them. When he acts in the West Bank for the Wataniya cell phone company, who is he working for?

The UN has repeatedly claimed that there would and could be no conflict of interest between Blair's paid position for JPMorgan Chase and his work in the Palestinian Occupied Territories. When Inner City Press asked Blair, after a meeting of the Quarter in the Conference Room 4 in UN Headquarters, about any safeguards in place for his UN and JPMorgan Chase roles, he scoffed. A Blair staffer confirmed that he continued in JPM Chase's employ.

This week, Tony Blair attended a press conference announcing the finalization of Wataniya's deal, which Blair "negotiated." At the UN noon briefing on November 11, Inner City Press asked about this last:

Inner City Press: yesterday, Tony Blair was in Ramallah, and he’s described as having negotiated on behalf of a cell phone company with the Israeli Government. There’s a whole press conference also that noted his role for the Quartet and for the UN. So I’m wondering, did he do this on behalf of the Quartet and the UN and what is the UN’s knowledge, do they have any knowledge on this business negotiating activity?

Deputy Spokesperson Marie Okabe: I have no knowledge of that.

Even forty six hours later, no answer has been provided. But even cursory research reveals that Blair's employer JPMorgan Chase served as a "mandated lead arranger" for the acquisition of Wataniya. Click here for the document.

So again, what safeguards are in place? Who is Tony Blair working for?

Tony Blair Associates has as a client Kuwait, and by implication its royal family, while Blair has met with the finance minister of Kuwait while representing JPMorgan Chase. Wataniya Palestine is substantially (57%) owned by investors from Qatar and... Kuwait. For the former, it's Qatar Telecom. But for the later, it's the Kuwait Investment Authority, which operates on behalf of the State of Kuwait -- Tony Blair Associates' client. So when Blair lobbies for Wataniya, who is he representing?

While awaiting the UN's answers, we note that in June 2009, "Wataniya Palestine CEO Alan Richardson recently called on Middle East envoy and former British prime minister Tony Blair to intervene on behalf of Wataniya to get the frequency released. Richardson previously has been involved in controversial cell phone projects in Iraq, with Orascom and Iraqna, contracts which the U.S. Pentagon urged the Coalition Provisional Authority to cancel.

So to the degree Tony Blair is working for Richardson, this too is problematic. But beyond the UN and Quarter, is Blair working for Kuwait? With JPMorgan Chase's documented mandate lead arranger role for the acquisition of Wataniya, there is a conflict which, it would seem, will require action. Blair is dismissive, and the UN appears cowed. Watch this site.

Update of November 9, 2009: So Jaime Dimon's father Theodore or Ted being given a job at JPMorgan Chase, can we call that nepotism?

Update of November 2, 2009: JP Morgan Chase's CEO James Dimon has trashed the proposed Consumer Financial Protection Agency, saying it "would create cumbersome, costly restrictions and the banks will likely pass those costs onto the consumers." Let's see how it work for Chase...

Update of October 26, 2009: J.P. Morgan Chase & Co. made nearly $50,000 in political donations through its PAC in September, counted by WSJ. The company donated $2,000 to Alabama Sen. Richard Shelby, the senior Republican on the Senate Banking Committee. The company also donated $1,000 to Pennsylvania Rep. Paul Kanjorski, the No. 2 Democrat on the House financial-services panel.

Update of July 20, 2009: JPMorgan Chase has a Community Reinvestment Act duty in West Virginia and Kentucky, for example, and in neighboring states. Meanwhile, Chase is funding 6 out of the top 8 corporate producers of MTR coal in Appalachia. (Massey, International Coal Group, Arch Coal, Consol Energy, TECO and Foundation Coal.), per RAN. Chase was a co-lead arranger and underwriter for more than $1 billion in new financing to Massey Energy less than 12 months ago. Massey Energy is the biggest and most controversial MTR mining company in Appalachia, and is responsible for nearly 20% of all MTR coal mined. Others have stopped funding it -- why not Chase?

Update of July 13, 2009: While the fate of the CRA in the CFSA legislation remains in the air -- or in the hands of Barney Frank -- we recommend this week two articles in the Charlotte Observer, both about Home Mortgage Disclosure Act. Inner City Press / Fair Finance Watch published its analysis of the 2008 data back in early April. But as in previous years, the Observer beat up other daily newspapers with its detailed story. Notably, the Observer story -- and that of ICP / Fair Finance Watch? -- does not include the 2008 loans of Washington Mutual. JPMorgan Chase is claiming that it had no duty to file the data, because of the structure of how the regulators let JPMC buy WaMu. This is a major loophole that should and will be pursued.

The Observer reports that "the HMDA data supplied by banks, for example, doesn't currently include borrowers' credit scores, the down payment amount and other details that would give a clearer picture of a lenders' decisions to make or deny a particular loan" and goes on to note that Inner City Press / Fair Finance Watch "has long argued the public needs more information about the role race plays in lending. Now that many banks are recipients of federal bailout dollars, [ICP] says they should submit to stricter HMDA requirements. 'It's the least they can do,' [ICP] said."

On the West Coast, JPM Chase is refusing to help Californians in their time of need, announcing it will not accept the State's IOUs. As noted by the longtime DC watchdog of the Associated Press, "clearly, the federal government has leverage over these institutions," said [ICP]. Hundreds of banks have received aid from the government as part of its $700 billion rescue plan last fall."

Update of April 13, 2009: Beyond the closings, "before it collapsed last September, Washington Mutual Inc. spent roughly $1 billion on a branch-building binge that replaced bank-teller windows with free-standing counters and cash-dispensing machines. New owner J.P. Morgan Chase & Co. is now dismantling it all, right down to the signs that promise "free checking, free smiles," and basically dragging the former WaMu branches back to the past. Traditional branches 'are superior in every way,' said Charles Scharf, who runs the Chase unit of J.P. Morgan. 'They might be boring, but they're practical.'" What ever happened to Chemical Bank's promise of five dollars if you're not served in five minutes?

Update of April 6, 2009 -- In the first study of the just-released 2008 mortgage lending data, Inner City Press / Fair Finance Watch has found that JPMorgan Chase was disparate to Latinos, confined them to higher-cost loans 2.10 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.26. Note: 2008 is the fifth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of 3 percent over the yield on Treasury securities of comparable duration on first lien loans, 5 percent on subordinate liens.

Update of March 30, 2009: Geithner Promotes Megabanks' including JPM Chase's Monopoly, in DC as at Fed, 17 Cut to 7 on Derivatives

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, March 28 -- Seven megabanks' renewed grab for monopoly power in the over the counter derivatives market shows how little Wall Street's real power has changed in the transition from the Bush to Obama administrations.

The banks, including Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank, are paying over $1 million to p.r. firm Prism Public Affairs to "educate" the voters weary of bonus and bailouts that those who caused the crisis should benefit from it.

Already, Congress members hungry for campaign contribution have submitted to closed door briefings by Ed Rosen of the law firm Cleary Gottlieb, who drafted the legislative language for monopoly.

The connector in this story is Timothy Geithner, under Bush the president of the Federal Reserve Bank of New York and now Obama's Treasury Secretary. Geithner in June 2008 convened closed door meetings with 17 banks, essentially allowing them to propose and draft their own rules for the derivatives market.

This led to advocacy by the Fair Finance Watch that Geithner's meetings were in fact rule making that excluded the public in violation of the Administrative Procedure Act, and by Inner City Press, as media, to get the meetings opened to journalists and the public.

March 16, 2009

In DC, "Inevitable" Fraud as Obama Jokes with JPM Chase

Byline: Matthew Russell Lee of Inner City Press

WASHINGTON, March 12 -- As President Barack Obama promises to find and "call out" misuses of the stimulus package, and to review the over 7,000 earmarks in the budget bill he signed this week, the chairman of his Recovery Act's Transparency and Accountability Board, Earl Devaney, told the Press of a "naive impression that given the amount of transparency and accountability called for by this Act, no or little fraud will occur... some level of waste and fraud is unfortunately inevitable."

Accordingly, the same is true not only at the United Nations -- despite Obama not mentioning the need for UN reform in his comments Tuesday after meeting Secretary General Ban Ki-moon -- but also with the bank bailout funds of the Troubled Assets Relief Program. Nevertheless, Obama joked with JPMorgan Chase's Jaime Dimon at the Business Roundtable's gabfest Thursday in Washington. As a smaller banker asked the final question of Obama -- no questions were taken after his meeting with the UN's Ban -- Obama said that banking has of late become complex, and that he could ask "Jaime" about it.

Also on the White House's list of Roundtable attendees was Citigroup's longtime board member and now chairman Richard Parsons. Citigroup veered into predatory lending, JPM Chase at a minimum securitized it, while lending to payday lenders and pawnshops. What then is so funny?

Update of February 16, 2009: Before Congress last week, JPMChase's Jaime Dimon complained, “we have a Byzantine alphabet soup of regulators,” and that banks and lenders have to deal with the OTC, the CFTC, the SEC and so on. He pontificated that it should be a U.S. system and globally regulated, and that no one should try to create a new regulator. He suggested the Federal Reserve -- and why not, since the Fed delivered Bear Stearns to him and Chase, which then got WaMu as well... The Fed's been good to Morgan Chase.

Update of February 9, 2009: JPMorgan Chase has just awarded bonuses, on the theory that particular units didn't lose money. Your tax dollars at work...

Update of February 2, 2009: Beyond the branch closing listed below, JPMorgan Chase plans to axe another 13 in San Antonio -- the countdown will continue.

January 26, 2009

As JPMorgan Chase Shutters WaMu Branches, Regulators Missing, Commitments Gone

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

NEW YORK, January 23 -- JPMorgan Chase is moving to closed down dozens of the Washington Mutual bank branches the government allowed it to acquire last year with no public notice or comment period. In Dallas, Chase has targeted 23 WaMu branches for closure, and another six in Fort Worth. In the Chicago area, Chase says it will shutter 57 WaMu locations. More branch closings will follow across the nation.

Community and consumers groups are belated protesting the acquisition, which was a one of a slew of so-called emergency transactions on which no Community Reinvestment Act comments were considered, including the accession of Goldman Sachs and Morgan Stanley to bank holding company status, and Bank of America's now discredited acquisition of Merrill Lynch.

JPMorgan Chase benefited from regulator-protected acquisitions not only of WaMu but, before that, of Bear Stearns. As first reported by Inner City Press, Bronx-based Fair Finance Watch submitted to the Federal Reserve Board comments on these transactions, but was told that emergency did not allow consideration of the issues raised, including prospective branches closings.

JPMorgan Chase has now told groups who have asked if it will continue Washington Mutual's CRA programs and commitments that since there is no more Washington Mutual, there is no more commitment.

This comes in the wake of JPMorgan Chase's Jaime Dimon reversing himself from a stated commitment to mortgages through brokers to abruptly shutting down Chase's wholesale mortgage unit. While groups are told this will give Chase more control over the terms of loans, brokers point out that Chase ultimately had control in the wholesale business, too. Commitments are made to be broken, apparently, particularly those by companies the federal regulators bailed out or merged out of existence. What, the question grows, is Timothy Geithner's position on this Main Street issue?

Update: later on January 23, community groups were told that JPMorgan Chase plans to close over 40 WaMu branches in New York State...

Update of January 19, 2009: So Morgan Chase has closed its wholesale mortgage business, after virtually promising not to. They claim this way they can better control the terms of loans. But the ones they made through brokers, they made decisions on. Back on Nov. 6, 2007, David Lowman, CEO of JPMorgan Chase's home lending division, and Patrick Sheehy, business-to-business channel
executive at Chase Home Lending, told mortgage brokers of “an unwavering commitment to our wholesale … lending” business. Jamie Dimon made this type of about-face and close-down before. It's just what he does.

November 17, 2008

Under the headline, "Economists offer support for Bernanke," this weekend's Wall Street Journal Europe quotes without qualification JPMorgan Chase economist Bruce Kasman that "Bernanke has done a good job." No mention that Bernanke gave Bear Stearns l and then Washington Mutual to JPM Chase, with no public comment period. Sure, if you were JPMC or Jaime Dimon, you'd lavish praise on Bernanke for these moves. But others?

Update of November 10, 2008: So how many WaMu branches is JPMorgan Chase planning to close? The bank refuses to say, but we aim to find out...

November 3, 2008

At UN, Stiglitz Slams Chase For Misuse of Bailout, Federal Reserve for Predatory Lending

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, October 30 -- The $700 billion bank bailout should not be used for mergers to increase market share, economist Joseph Stiglitz told the Press on Thursday. Following a UN panel discussion about the global financial crisis, Inner City Press asked Stiglitz about predatory lending and, as an aside, if he would consider the post of Secretary of the Treasury. While not directly answering the latter, Stiglitz said that the current Secretary, Henry Paulson, is ignoring the Congressional intent of the bailout and is allowing the funds to be misused by the banks.

Stiglitz specifically cited a conference call by JPMorgan Chase, in which an executive bragged that the $25 billion it is claiming from the bailout will make Chase "more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment." Stiglitz called that an abuse, and also took a jab at the Federal Reserve, which he said had the power to crack down on predatory lending since 1994 but did not. Video here, from Minute 19:31.

Update of October 20, 2008: It's telling, in terms of how sloppy the corporate giveaways have been, that neither the Fed nor Treasury thought through how buying warrants in JPMorgan Chase would put Chase in the position of reducing book value or recording a loss. Expect the rule changing for the biggest banks to continue...

Update of October 13, 2008: Tales for a time of lawless regulators giving rubber stamp bank merger approvals without any public notice or comment -- on October 10, the Federal Reserve Board sent Inner City Press a partial response to a Freedom of Information Act request made back in March, about the Fed voting without public notice or comment to bail out JPMorgan Chase's acquisition of Bear Stearns without even following the law requiring the involvement of Fed governors. Six months after the fact, the Fed releases an April letter to Congress saying the Governor Mishkin, who has since left the Board, was in the air on a flight from Finland to the U.S. and therefore couldn't be involved. Click here to view. And now he's gone...

Update of October 6, 2008: Now it's reported that JPMorgan Chase was looking at SunTrust, before it got WaMu for a song...

September 29, 2008: ...When Inner City Press / Fair Finance Watch complained to the Office of Thrift Supervision about the subprime practices of Washington Mutual's affiliate Long Beach Mortgage, the OTS responded that is was only concerned with WaMu's savings bank, not its finance company. WaMu never got CRA credit for Long Beach's loans, but now WaMu has failed and been bought at fire sale prices by bottom-feeder JPMorgan Chase...

Update of August 25, 2008: Bernanke's spin: "the Federal Reserve took actions that facilitated the purchase of Bear Stearns and the assumption of Bear's financial obligations by JPMorgan Chase & Co. This experience has led me to believe that one of the best ways to protect the financial system against future systemic shocks, including the possible failure of a major counterparty, is by strengthening the financial infrastructure, including both the "hardware" and the "software" components. The Federal Reserve, in collaboration with the private sector and other regulators, is intensively engaged in such efforts. For example, since September 2005, the Federal Reserve Bank of New York has been leading a joint public-private initiative to improve arrangements for clearing and settling trades in credit default swaps and other OTC derivatives."

So, the lesson learned from a bailout with no public comment is a rulemaking with the industry with no input from the public...

Update of August 18, 2008: Like a coup leader trying to ex post facto legalize their seizure of power, the Federal Reserve has included in its "Legal Developments 2nd Quarter 2008" publication released last week its Orders - with no public comment allowed -- bailing out Bear Stearns and letting JPM Chase buy it, available at http://www.federalreserve.gov/Pubs/Bulletin/2008/pdf/legalq208.pdf .All the patina of legality with none of the content...

Update of August 4, 2008: Talk about a conflict of interest, and regulatory capture -- last week, the regulators and four big banks issued coordinated press releases. "Officials from banking giants Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. issued a joint statement saying, 'We look forward to being leading issuers as the U.S. covered bond market develops.'" And those they issued the statement with and for are supposed to objectively oversee them...

Update of July 28, 2008: This week, from the mail bag, a story involving JPMorgan Chase --

Subj: JP Morgan Chase

From: [Name withheld in this format]

To: Inner City Press

Date: 7/22/2008 9:29:41 P.M. Eastern Daylight Time

Dear Mr. Lee,

I am wondering if there are any other people who have had a similar problem to mine with JP Morgan Chase. I am a 68 year old senior who lost her home to these vultures in an unbelievable manner. In brief this is what happened to me.

Leon D. Black had just purchased WMC Mortgage Corp. when I did a refi with WMC in March 1998.... Loan was equity based. I never received any copies of the loan documents and had statements from WMC saying they were lost or destroyed. Even had inter office communications at WMC as late as July 1998 referencing the loan documents.

The loan was a bait and switch. The reason for the refi was to permanently get rid of a loan I had with, The Money Store. WMC was to be the new first mortgagor AFTER they paid, The Money Store ("TMS"). Loan was to be conventional fixed rate. Instead payments went from 2900.00 a month to 4800.00 a month by September 2000. I had little recourse but to try and save my home of 18 years and its tons of equity and so, I filed Bankruptcy. Big mistake!

I was never told that the loan was sold to Fairbanks four months before I filed BK. WMC fraudulently represented themselves throughout my BK as the first mortgagor when they were not.

I had a Confirmed Plan in Bk that was current yet WMC somehow managed to have the Stay Lifted in January 2005. My home was sold at Trustee Sale by JP Morgan Chase on June 22, 2005.... In June, 2006....I was sent a thank you letter from HomEq on behalf of TMS who unknown to me had closed their doors a month after my loan closed with WMC. Oddly, during my Bk I would get Notices from FirstUnion who could never find any reference to me, not even by my social security number. Turned out WMC used someone else's SS number for my loan, I don't know why but they did. First Union had taken over TMS which was ultimately taken over by HomEq. The HomEq letter also contained the cancelled Note & Deed of trust for TMS. In short, my home was ultimately sold by JP Morgan Chase who knew there was always a question that TMS was never paid and none of these vultures had any standing to sell my home on June 22, 2005 and as noted in the Trustee Guaranty Report which clearly showed the only first mortgage to be TMS for 281,000.00. They paid the TMS mortgage off in full three months after they sold my home at trustee sale, using a company called ALTA which turned out to be another alias of Fairbanks.

Update of July 14, 2008: Yet more approvals with no prior public notice, much less comment: In a letter dated July 1, the Fed granted a request to allow JPMorgan Chase Bank to purchase a $44 billion portfolio of Bear Stearns derivative transactions and hedges acquired by the holding company when it bought Bear Stearns. The portfolio includes Bear Stearns Forex Inc. and Bear Stearns Credit Products Inc. The Fed spun that "the proposed transaction in this case is a byproduct of a one-time corporate reorganization and would facilitate the integration of recently merged companies," and granted the waiver. The Fed also granted JPMorgan's request to exempt from Fed rules certain transactions between the firm and Maiden Lane LLC - the limited liability company set up with the Federal Reserve Bank of New York to hold some Bear Stearns assets. "Although (JPMorgan Chase) has a substantial subordinated exposure to Maiden Lane, the (New York Fed) has the predominant economic interest in Maiden Lane," the letter from the Fed to JPMorgan, dated June 26, stated. "Granting the exemption also appears to be in the public interest because it will facilitate the consummation of the (New York Fed) facility," the Fed letter said. So the Fed considers consummation of its own transaction to be in the public interest. But did they hear from the other sides?

Update of July 7, 2008: Ex-Chaser Don Layton, now at E-Trade, has scooped up an old crony, Joe Sclafani. Like we said, it's a sinking ship... CHASE HEALTHADVANCE's pitch to patients: "So go ahead and schedule that procedure you have always wanted." Pitch to doctors: "Refrigerators, carpet, televisions, even tires are advertised with interest-free financing. This is what attracts consumers." Percentage of dentist's fee that lender keeps: 4.9% on no-interest loan for three months, up to 13.9% on no-interest $5,000 loan for 24 months, 4.99% on extended-payment plans. Finance terms: No interest for up to 24 months (if balance not paid in full, retroactive APR of up to 27.99%) of fixed APR of 11.99% to 27.99%. -CR

Update of June 30, 2008: Weeks late, the Federal Reserve has written to Inner City Press that

This is regarding your FOIA request for documents related to the JP Morgan / Bear Stearns transaction. We have interpreted your request to include the Board meeting minutes from Mar. 14 and 16. The minutes are now available online on the Board's public website:
http://www.federalreserve.gov/newsevents/press/other/20080627a.htm
We will be contacting you shortly about the scope of the remainder of your request.

For now, as even the Dow Jones story on the minutes reports, "four Fed board members were involved in making the decision to come to the rescue of Bear, the Fed's minutes show."

Update of June 23, 2008: JPMorgan Chase's securities arm sued a former private banker on Monday, alleging he stole confidential and proprietary information about the bank and its clients. The lawsuit, filed in U.S. District Court in Manhattan, is seeking an injunction against Hernan E. Arbizu, a former senior private banker for the Argentina and Chile region at J.P. Morgan Securities' private banking department in Manhattan. Live by the sword...

Update of June 16, 2008: This week, Inner City Press / Fair Finance Watch filed comments against the Federal Reserve's secret process with banks, in essence a rule-making excluding the public even those the topic, credit derivatives, has come up because of the subprime lending crisis. The financial institutions invited -- and now challenged -- included JPMorgan Chase. The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engages in rule-making, it must provide notice to the public, and allow and weigh public comments. Press accounts make clear that the financial instruments and regulatory issues discussed behind closed doors at the FRBNY on June 9 are related to issues of public interest, which in fact are disproportionately impacting low- and moderate- income people and communities of color -- subprime and predatory mortgages. Watch this site.

Update of June 2, 2008: J.P. Morgan Chase, too, has been understating its borrowing costs for LIBOR calculations, in order to hide what those in the know think of the company and its prospects...

Update of May 19, 2008: JPMorgan Chase disclosed last week in its quarterly report that it received a "Wells Notice" from the Securities and Exchange Commission indicating the SEC staff is considering recommending an enforcement action "in connection with the bidding of various financial instruments associated with municipal securities." And this is who the Fed chose for Bear Stearns?

Update of May 12, 2008: This week, from the mailbag --

Subj: Fwd: Chase mortgage fraud

Date: 5/2/2008 3:08:29 P.M. Eastern Daylight Time

From: [Name withheld in this format]

To: Inner City Press

I have been with Chase for years. This is my 3rd mortgage through them. When I applied for the mortgage, they told me I needed to take a 2nd out so I did not have to pay the PMI. They told me this 2nd loan would be at 9.6% but could easily be paid off at anytime by me. They told me I had to do this b/c the house I was buying appraised for $170,000 (we were buying it for 159,000) I never received any other good faith estimates in the mail beside the 1st one at 9.6% for a loan of $8000. I called them weeks before closing stating I wanted to take out $18000. (John Priesta from Chase). The loan was then given to woman named Heather at Chase. I asked Heather if there were any problems with the loan and if I would be getting anything in the mail stating the new APR..she said no. A week before closing she called and said the loan apr would be 11%. Since it was so close to closing I said that was fine since I was told I could pay it off early. Closing was on Feb 28th and 5 pm. when arriving at Conrad Law firm in WV they as well as the seller's of the house (Bank of Charlestown) were shocked that they had closing papers there with an interest rate of 12.4% and that if we paid the loan off early we would receive a penalty! We were never notified of this, and b/c it was so late at night..nothing could be done about it..we were forced to sign the papers or lose the house. When I phoned Chase a supervisor told me he couldn't do anything b/c I signed the papers. I then phoned my loan officer John Priestas who refused to take my calls, he would only e-mail me and avoided my ?..why wasn't I notified of this rate hike?? I then turned to Susquehanna bank to take over my loan..they told me that my credit was almost 700 and that the rate shouldn't have ever been that high..I was also told (less than 2 months after Chase appraised my home) that my house appraised for $220,000 and I shouldn't even had to pay a PMI!! Why is Chase practicing Mortgage Fraud..I have phoned John Priestas supervisor several times and they will not return my call. I was also told that a credit check revealed that Chase check my credit score several unnecessary times..affecting my score. In the summer of 2007 I received several papers stating my and my husbands credit scores (that time they were 723)..John assured me that the printer just spitted them out..that it would not affect my credit score...

We aim to have more on this....

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: "This week you'll see several organization announcements from our management committee about their direct reports, and we expect the rest by the end of the month," Steve Black and Bill Winters, co-heads of J.P. Morgan's investment-banking business, told employees in a memo sent Monday. "People selection is the most important and most difficult task in any merger, and we want to make sure we spend the time to get it as right as we can." They promised to inform all J.P. Morgan Chase and Bear employees whether they would have a job no later than the merger's expected close on June 1. We'll see....

Update of April 21, 2008: The Federal Reserve continues to hit new lows. In an order dated April 1 (mailed out on April 11), the Fed purported to review -- with no public input -- and approve JPMorgan Chase's proposal to acquire Bear Stearns and its New Jersey-based bank, Bear Stearns Bank & Trust. "Based on all the facts and circumstances, the Board has determined that an emergency exists requiring expeditious action on the proposal." So much for CRA... To be continued.

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 c/o FRBNY

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!

APRIL 17, 2006

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 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. 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 January 14, 2004, proposal to acquire Bank One. For or with more information, contact us.

Update of December 26, 2005: Beyond JPM Chase’s foray deeper into subprime, through cards, here was Bill Harrison on CNBC on December 19:

Q: You are on the Merck board, and you`ve been on the board for five years. Have you spoken about how much this Vioxx situation could ultimately cost the company?
HARRISON: Sure. We try to analyze that. We think we have a very good legal case. And we`re going to take each case on one by one and we`ll see what happens. But I feel good about what`s happening at Merck and the new CEO and Dick Clark has taken the right action. You saw some of that today in the reaction from the analysts. I think we`re on the right track. And Merck has a lot of great fundamentals.
”Q”: Yes. It -- the market certainly reacted well to Dick Clark`s strategy.

And it wasn’t even New Years yet…

Update of December 19, 2005: Chase pays yet another fine – last week, 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…

Update of December 12, 2005: This week, from the mailbag

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.

That’s Chase…

Update of December 5, 2005: Military personnel on active duty are being overcharged on high interest loans by banks including JP Morgan Chase, a new investigation of compliance with the Servicemembers’ Civil Relief Act (SCRA) by Inner City Press / Fair Finance Watch has uncovered. Through documents obtained under the Freedom of Information Act, ICP had documented widespread violations of the SCRA, defrauding and overcharging of those in active military service, and regulatory inertia in dealing with the abuses.

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.”

The purpose of the SCRA, formerly known as the Soldiers’ and Sailors’ Civil Relief Act, is to provide interest rate relief and other protections “to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation.” Section 502.

JP Morgan Chase’s practices, and their impact on front-line military personnel, are reflected in the complaint now 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%.”

We agree – unbelievable. Or rather, unconscionable. For or with more information, contact us.

Update of November 28, 2005: Inner City Press / Fair Finance Watch is analyzing Gulf Coast mortgage lenders in the Katrina-zone, identifying those which in 2004 had the worst disparities between the percentage of African American and white borrowers who were charged higher costs, over the Federally-defined rate spread of 3% over comparable Treasury securities on a first lien loan, 5% on subordinate liens. Interim results including this finding, that in the New Orleans Metropolitan Statistical Area, Chase Manhattan Mortgage Corporation in 2004 was 5.7 times more likely to confine African Americans to higher cost rates spread loans than whites...

Update of November 21, 2005: The Federal Reserve on November 18 gave JPMorgan Chase & Co. permission to trade “physical commodities,” provided that the market value of commodities held not exceed 5% of its core - or Tier 1 - capital, and that it notify the Federal Reserve Bank of New York if the commodities' value exceeds 4% of the bank's core capital. The approval doesn't allow the bank to own, operate or invest in facilities that extract, transport, store, distribute or refine commodities....

Update of November 14, 2005: The American Banker reported last week that JPMorgan Chase plans to close its office gyms in the United States and Europe as president James Dimon seeks to reduce costs. ‘The firm has made the decision to close its internal fitness centers globally with effect from January 2006,’ according to a memo written Tuesday by John Bradley, the human resources director for Europe, the Middle East, and Africa. ‘Since our fitness centers were built the supply of external centers has increased dramatically.’” So very decisive...

Update of November 7, 2005: The FT of November 5 reports, “JPMorgan Cazenove has made progress with companies well outside Cazenove's traditional hunting ground. Last month, it led the flotation of Kazakhmys, the copper miner.” Of course, this is not “project finance”...

Update of October 31, 2005: This week, in the spirit of Halloween, back to the mailbag:

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.

Update of October 24, 2005: Much was made last week of the moving-up of D-Day (Dimon Day) to the end of this year, from mid-2006. The Times quoted the D-Man: “Obviously, there is a difference in being the CEO or not being the CEO. You are either flying the plane or you're not." Well, we’ll see how he flies it: and if the flight plan continues to contain support for payday lenders, for example...

Update of October 17, 2005: We must of course note the U.S. District Court’s decisions in the cases by the OCC and the Clearing House banks -- including JPM Chase --against the NY Attorney General, to avoid providing the credit score information they say would justify the racial disparities in their lending. Why should the public believe a defense that they go to court to conceal? Whether or not an appeal is taken, and whether or not it’s successful, the public must demand that the OCC bring enforcement action(s) on JPM Chase’s disparities, and must separately pursue them, far and wide and ceaseless...

Update of October 10, 2005: What did the hype environmental announcement mean? Last week 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.

Update of October 3, 2005: From a first-person report in the September 30 Slate: “My conversation with Chase Home Finance was even less reassuring. When I ventured, delicately, to suggest that Chase might forgive its debtors who were ruined by Katrina, or perhaps cooperate with FEMA to that effect, my interlocutor became strident, as though I'd borrowed the money from him personally. Sir, you owe that money. Chase has given you that money and now you have to pay it back!” Great...

Update of September 26, 2005: Chase in further subprime fall out: the U.S. District Court in Delaware has denied most claims made by JPMC’s Chase Home Finance unit in its civil case against Advanta. Chase sought $88 million in damages from Advanta following its 2001 purchase of subprime lender Advanta Mortgage Corp. Chase paid more than $1 billion for the subprime lender Advanta Mortgage, then later accused the seller of fraud and negligence in regard to the sale negotiations. Earlier this month the court entered its judgment in the civil fraud case, denying most of Chase's claims, but not all. The court ruled in Chase's favor on only one contract claim, saying that Advanta must pay Chase $17.5 million plus interest. But in a separate issue involving claims and counterclaims, Chase agreed to pay Advanta $8.75 million. So what did Chase win? Entry into subprime -- while claiming publicly to have entered subprime not through acquisition....

Update of September 19, 2005: More on JPM Chase’s involvements with subprime lenders. Earlier this month, JPMC disclosed that it owns more than 5% of the CIT Group, which is among other things a subprime mortgage lender (regarding which consumer compliance issues have been raised). As with JPMC’s underwriting for Ameriquest, it appears that JPMC has no safeguard or standards for its involvements with subprime lenders...

Update of September 12, 2005: JPM Chase, deal-making in the disaster zone: last week the price of the Capital One - Hibernia proposal was cut by $350 million. Some had predicted the banks would hold off, concerned about bad press. Involved in this post-hurricane card game as a financial adviser: J.P. Morgan Chase. Any of the fees being donated for disaster relief?

Meanwhile, while Chase often claims to be responsible in the subprime “space,” and to have entered it consciously, organically, and not through acquisition, here’s from Fitch, last week:

Fitch Ratings has taken rating actions the following United National Home Loan Owner Trust issue Series 1999-1... The collateral consists of subprime 25-year fixed mortgage loans secured mostly by second liens on residential properties... The loans were originated by The First National Bank of Keystone, NA ('Keystone'). The deal is master serviced by Advanta Mortgage Corp., which was acquired in 2001 by Chase Manhattan Mortgage Corporation (Chase), a subsidiary of J.P. Morgan Chase & Co. Chase is rated 'RPS1' by Fitch as a primary servicer of subprime collateral.”

Yep, JPM Chase bought Advanta. And so it goes... 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.” Great...

Update of September 5, 2005: Chase as a Citigroup copy-cat: on August 31, JPM Chase announced a proposal to acquire the credit card business of Sears Canada, to “expand its credit card business at a time of sweeping consolidation in the industry... Going forward, Chase said it also agreed with Sears Canada to offer private-label and co-branded Sears MasterCard accounts to new and existing customers for 10 years. As part of the deal, Chase, which has 95 million credit card customers, will manage four operating centers in Canada with about 1,000 employees.” Good luck...

Update of August 29, 2005: How interesting, from August 22: Moody's Investors Service rates J.P. MORGAN MORTGAGE ACQUISITION CORP. 2005-FLD1 SUBPRIME MORTGAGE DEAL. Yes, that’s subprime mortgage deal... Also from August 22, on Reuters:

JPMorgan Chase & Co. said on Monday it was investigating a credit card solicitation sent to a California man addressed as a "Palestinian Bomber." Kelly Presta, executive vice president at Chase Card Services, said in a statement the inappropriate address on the letter came from a mailing list Chase purchased from a vendor. Presta said the company's automatic screening procedures did not catch it.... Habbas told Reuters he phoned the telephone number on the solicitation and provided the operator with his postal code and an invitation code listed on the letter. The operator then addressed him as "Mr. Palestinian Bomber."

No comment (necessary)...

Update of August 22, 2005: Last week it was reported that JP Morgan Chase is lining up as lead underwriter for a $1.5 billion MSB issuance by the subprime lender Ameriquest, which has set aside over $300 million to settle predatory lending charges. Some standards you got there, Chase...

Update of August 15, 2005: Morgan Chase’s subprime connections -- on August 9, 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.

Update of August 8, 2005: Parmalat has sued J.P. Morgan Chase, along with UniCredito, for $5.4 billion. UniCredito said that the claim, filed earlier this month, named investment banking arms UniCredit Banca d'Impresa and UBM and UniCredito Italiano and two intermediaries, part of Morgan Chase, Reuters has reported. "At all times, JP Morgan believed it was dealing with an ethical company," said a spokesman for the bank. "To suggest that we contributed to, or knew of, Parmalat's deception, is wrong and irresponsible." We’ll see...

Update of August 1, 2005: Last week Inner City Press received additional consumer complaints against JP Morgan Chase, including for example one that “someone employed by Chase set up an unauthorized equity line of credit on our home. One three separate occasions someone at Chase mailed unsolicited Home Equity Line of Credit checks to our house... Chase submitted false information for our credit report showing that we had a debt of over $10,000 on this line of credit.”

To which Lori Dennis of Chase’s “Executive Resolution Group” responded that the account “was inadvertently established, and has since been deleted from our systems.” So Chase did set up this account, based on unsolicited live checks...

Update of July 25, 2005: And now Coulter is leaving. According to Reuters, Richard Cashin, head of One Equity Partners, and Jeffrey Walker, head of JPMorgan Partners, who reported to Coulter, will now report jointly” to Harrison and Dimon. For how long?

Update of July 18, 2005: California's attorney general last week filed a lawsuit against Chase Bank and Trilegiant Corp. alleging they tricked consumers with offers for membership programs that did not adequately disclose terms in programs for car rental and hotel discounts, product warranties and repair rebates, and savings on home services. The suit was filed in San Diego County, naming Chase Bank USA, Chase Manhattan Mortgage Corp., Trilegiant Corp. and TRL Group Inc. as defendants. The offers for free trial memberships did not adequately inform consumers they would be billed automatically if they did not cancel memberships within a specified period of time, typically 30 days. A Chase spokesman declined to comment. Typical....

Update of July 5, 2005: Last week JP Morgan Chase put out a press release purported 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. And on a major issue documented during the merger process, the funding of payday lenders and other fringe financier, no announcement from JPM Chase.

Wild Bill Harrison was more forthcoming in the Brazilian press. Dow Jones of June 30 reported the “JPMorgan Chase & Co.'s chief executive said in a published report that the company plans to start a joint venture or acquire a bank to enter Brazil's retail market. ‘It does not make sense to begin opening agencies here,’ William Harrison said in Wednesday's edition of the Brazilian newspaper Valor Economico... A spokeswoman for the New York-based company's Brazil office, in Sao Paulo, confirmed Mr. Harrison's comments.” Hmm....

Update of June 27, 2005: Dow Jones Newswires of June 20 noted that JPM Chase “reported a 15.6% Class A stake in Lazard Ltd. according to a Schedule 13G filed Monday with the Securities and Exchange Commission. JPMorgan, one of the underwriters for Lazard's initial public offering in May, beneficially owns 5.86 million Lazard Class A common shares, the filing said. JP Morgan reported its stake on a form designated for passive investors, or those not seeking to change or influence a company's operations.” We’d think that this over 15% stake required some sort of regulatory review and approval... Or how ‘bout this one? On June 23, Morgan Chase announced a proposal to buy trading technology firm Neovest Holdings. “JP Morgan expects the deal with the private investors, led by CCP Equity Partners, to close by the third quarter.” Hmm....

For or with more information, contact us.

Update of June 20, 2005: On June 16, both the Office of the Comptroller of the Currency and the Clearing House, a trade association of large banks, sued the New York Attorney General, seeking an injunction against investigation of disparities in the subprime lending of JP Morgan Chase and others. While seeking to evade fair lending scrutiny in the U.S., Morgan Chase also announced last week that it sold its 5.3 percent stake in Gulf International Bank to the Saudi Arabian Monetary Agency. "SAMA, which already owned a 22.2 percent stake in GIB before the transaction, acquired J.P. Morgan's shares for an undisclosed amount of cash. As one of three global banks recently granted a license to open a Saudi Arabian branch, we decided to sell our stake in Gulf International Bank to eliminate the potential for any conflicts of interest between our business and that of GIB," JPMC said-in-a-statement. On conflicts, Morgan Chase now follows Citi, tryin to settle for its Enron involvement for $2.2 billion...

Update of June 13, 2005: They trade the strangest things. J.P. Morgan Chase has received approval from the Office of the Comptroller of the Currency to beginning trading “financially settled electric power contracts.” Over the last two months, the bank has expanded its energy trading operations to include power, natural gas, coal and emissions. J.P. Morgan is also seeking permission from regulators to trade physical power. Speaking of power trading, the lobbying goes on -- Morgan Chase announced last week that Naomi Gendler Camper will join the firm as co-head of Federal Government Relations., reporting to Rick Lazio, who took the job after losing as Republican candidate for Senator from New York. Ms. Camper was most recently the banking and tax aide of notoriously anti-CRA Democratic Senator Tim Johnson of South Dakota. “Prior to working with Senator Johnson, Ms. Camper was assistant counsel at the Investment Company Institute from 1999 to 2001, where she advised mutual fund companies on tax-related legislation and regulations. From 1997 to 1999, she worked in taxation at Wilmer, Cutler & Pickering, advising corporate clients on tax implications of financial transactions.” Great...

Update of June 6, 2005: Last week the company let slip that its second quarter has been "the worst the firm has experienced in some time". In January, J.P. Morgan Chase reported a 34% fall in net annual profits from $ 6.7 billion to $ 4.5 billion. What an inspired merger...

Update of May 31, 2005: From the next installment of “They buy the strangest things”: Chase and publishing - the right relationship? Last week newsletter publisher Hanley Wood LLC was sold to J.P. Morgan Partners in a deal that sources said was worth an initial $618 million. Hanley Wood’s magazine division publishes 22 trade titles and 17 Web sites having to do with building products. Hanley Wood also hosts conferences, such as the World of Concrete conference. Rock heads...

Update of May 23, 2005: ICP on May 20 submitted to the Florida Attorney General’s office an analysis of and demand for action on the glaring disparities in JP Morgan Chase’s 2004 mortgage lending in Florida:

Whites: 58,177 applications, leading to 9984 denials (17.16% denied) and 40,824 originations; 1725 [or 4.23%] exceeded rate spread.
African Americans: 6360 applications, leading to 1977 denials (31.08% denied, 1.81 times higher than whites) and 3627 originations; 436 [or 12.02 percent] exceeded rate spread [2.84 times higher / more likely to be over rate spread than whites].

Latinos: 18,719 applications, leading to 3623 denials (19.35% denied, 1.13 times higher than whites) and 12,762 originations; 544 [or 4.26 percent] exceeded rate spread [1.01 times higher / more likely to be over rate spread than whites].

Morgan Chase all over the place -- an analyst at KeyCorp's Victory SBSF Capital Management opined last week that JPM Chase is trying to “demonstrate corporate responsibility, particularly to retail banking customers, who are the ones most likely to care about environmental issues. ‘Any large financial services company that plays in retail thinks of this as a marketing effort,’ she said, adding that ‘until recently, JPMorgan Chase had "done a poor job in addressing their retail customers."’” Until recently? They’re still doing a poor job. And its ironic that JPM Chase attempt to run the tide involves important-but-far-away environmental issues, while leaving unchanged JPM Chase’s continued lending to payday lenders, for example...

Update of May 16, 2005: This week we step back, temporarily, from drilling ever-deeper into the 2004 Home Mortgage Disclosure Act data. In one of the three 60-second TV ads that J.P. Morgan Chase released on May 9, a father watches his daughter prepare for her wedding. To the tune of Bette Midler's 1979 "Wind Beneath My Wings," the ad jumbles scenes from the daughter's childhood with images of a Chase credit card and the father talking with a Chase banker about his daughter's future. “Be prepared for life's most important moments," concludes the ad, which J. Dimon described last month as a "tear jerker." "Chase gives you everything you need to be the hero." Yeah -- unless for example you’re their subprime mortgage borrower...

Update of May 9, 2005: JPM Chase, after the deadline, provided ICP with a bank-chosen “Super LAR” file and, only in “zipped” (and un-openable) form, the actual loan application registers of JPM Chase’s three HMDA reporters. JPM Chase’s cover letter stated that the Super LAR “combined data for all JPMorgan Chase HMDA reporting entities but excludes loans that may be reported twice as a result of interaffiliate loan purchases and sales.”

JPM Chase was asked for the real data of these three reporters; this request was rejected, based on the argument that the Chase-selected Super LAR was the most accurate dataset to review. ICP persisted, and was provided with non-zipped LARs for the three reporters. Based on the above-quoted statement from JPM Chase’s cover letter, ICP assumed that the additional loans in the actual LARs would list, as “Type of Purchase,” affiliates of JPM Chase. (That’s what “interaffiliate” means, right?)

Upon opening and cumulating JPM Chase’s three actual LARs, the additional 29,620 loans, in the type of purchaser column, broke down as follows:

12,159 of the “new” loans in the actual LARs were listed as sold to Freddie Mac; 2683 were sold to Fannie Mae, 605 were sold to Ginnie Mae, 300 were sold to insurance companies, 4796 sold to banks, 8491 were not sold during 2004, and only 586 were sold to affiliates.

And so what did and does it mean, when JPM Chase claimed that its Super LAR (which nearly all studies are using) varies from the real data only in this it “excludes loans that may be reported twice as a result of interaffiliate loan purchases and sales”?

The Long Island Business News of May 6 reported that “Chase's rejection level was even greater in Suffolk, where 27 percent of 6,257 applications were not accepted... ‘We make loans that people can comfortably handle,’ said Thomas Kelly, a Chase spokesman. ‘If someone puts down 5 percent on a house, makes payments for a year and then doesn't make payments and turn over the keys, we lose money on it and they've lost their house.’ Kelly added that the statistics could be misleading because ‘many of the people we rejected might have also been rejected by more than one bank.’” And? This is one of the most convoluted attempted rebuttals of HMDA data we’ve yet heard. Is Chase proposing an expansion of HMDA data to include a “previously-denied” column? And since what Chase points at is also true in the data of its peers, where’s the beef?

More on JPM Chase: on May 5, JPM Chase announced it will pay $356 million to settle investor lawsuits related to the failure of Commercial Financial Services Inc.. In a securities filing, the bank also said the U.S. Securities and Exchange Commission may sue a former Bank One employee -- and “Bank One” -- for securities violations in connection with the collapse of National Century Financial Enterprises....

ICP Fair Finance Watch continues drilling deeper into the 2004 Home Mortgage Disclosure Act data. Following its petitioning last week of state attorneys general, ICP was asked to produce a study of disparities by gender as well as race. The results, being forwarded to those who requested them, are not pretty. Here’s JPM Chase:

White men: 241,337 originations of which 12,594 (or 5.22%) were at rate spread

White women: 92,764 originations of which 6899 (or 7.44%) exceeded the rate spread (1.43 times higher / more likely to be rate spread than white men)

African American men: 16,654 originations of which 2306 (or 13.85%) exceeded the rate spread (2.65 times higher / more likely to be rate spread than white men)

African American women: 14,684 originations of which 2263 (or 15.41%) exceeded the rate spread (2.95 times higher / more likely to be rate spread than white men)

Hispanic men: 32,669 originations of which 2188 (or 6.70%) exceeded the rate spread (1.28 times higher / more likely to be rate spread than white men)

Hispanic women: 13,490 originations of which 1021 (or 7.57%) exceeded the rate spread (1.45 times higher / more likely to be rate spread than white men)

ICP has provided this and other analysis to the regulators and state attorneys general, demanding investigation and action.

Update of May 2, 2005: We note without (explicit) comment that last week, while being questioned about discrimination in its own lending, and while refusing to stop enabling payday lenders, JPM Chase announced... a new environmental policy. "We were committed to establishing a significant leadership position on the environment and we have achieved it," J.P. Morgan's director of global government affairs and policy Slick Rick Lazio told the WSJ. But what about payday lending? What about discrimination in lending?

Update of April 25, 2005: Inner City Press / Fair Finance Watch has reviewed, now for the New York City Metropolitan Statistical Area, the 2004 Home Mortgage Disclosure Act data of JP Morgan Chase, including the new information concerning which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien), and has found the following:

Whites: 10,328 originations of which 252 (or 2.44%) were at rate spread

African Americans: 1814 originations of which 128 (or 7.06%) were at rate spread (2.89 times higher / more likely to be rate spread than whites)

Latinos: 1810 originations of which 90 (or 5.0%) at rate spread (2.05 times higher / more likely to be rate spread than whites).

It must be noted that JP Morgan Chase has provided its own selected “Super LAR,” while not providing access to its actual raw data as have other lenders. Specifically, as stated in ICP’s complaint to Robert.Meusel[at] Chase.com (the HMDAInfo [at] Chase.com address in his cover letter to ICP doesn’t or no longer works) -- “You have provided us with a self-selected ‘Super LAR,’ and files (or icons) for each of JPMC’s three HMDA reporters. We have become aware that JPMC’s self-selected Super LAR does not report the data as do JPMC’s peers. According, we have tried to open the three actual LARs -- and we have found that they are password-protected. We are formally requesting the password(s), and/or that the three actual LARs be provided immediately.” [This item will be updated, probably May 9]

Update of April 11, 2005: Our focus remains on the 2004 HMDA data, which Chase provided late, along with a long letter and reference to its “SuperLAR.” Based on the 1,083,774 applications reported therein, for loans secured by a first lien, African Americans are 2.68 times more likely to receive rate spread loans than whites at J.P. Morgan Chase. This is more disparate than for example National City Corporation’s 2.21 disparity reported in the Wall Street Journal of March 30, 2005. See, “Blacks Are Found to Pay High Rates for Home Loans,” WSJ of 3/30/05, D2; compare to the 4/4/05 Associated Press report on ICP’s first study, “U.S. Community Group Alleges Citigroup, Bank of America Discriminate in Mortgage Lending.” For more on ICP’s continuing review, see this week’s HMDA study, click here to view. Developing...

Update of April 4, 2005: This week it’s logistic. On February 28, ICP Fair Finance Watch made a formal request for JP Morgan Chase’s 2004 mortgage lending data, under 12 C.F.R. § 203.5(c) (the data must be provided “by March 31 for a request received on or before March 1.” ICP’s request, directed to the signer of JPMC’s previous responses to ICP’s regulatory comments, also inquired as a fair lending matter about Morgan Chase’s “safeguards, if any, for purchasing from, securitizing or serving as trustee for and otherwise assisting (including through warehouse lending) other subprime lenders, including payday lenders and car title lenders.”

Numerous other institutions began provided ICP with their data as early as March 4. On Friday, March 25, Chase’s CRA officer left ICP a voice mail, saying that the data would be forthcoming. ICP responded in writing, specifying the format for the data and where and how to deliver it. On March 31, JPMC’s data did not arrive (while numerous other institutions’ data did arrive). Inferring that Morgan Chase somehow thought that giving the data to FedEx or some other overnight service on March 31 complied with the regulation, ICP expected to receive the LAR on April 1 -- a day late, but still allowing for computer analysis over the weekend. (The American Banker newspaper of April 1 noted that ICP would be releasing a study of banks’ 2004 data by the end of the weekend; click here to view the first of ICP’s studies).

On April 1, by mid-afternoon, no JPMC data had arrived. ICP e-mailed Chase’s CRA officer at 4:15 p.m.; at 6:25 p.m., he responded, stating in pertinent part that "there is no one around at this hour to validate." Morgan Chase had an entire month to fulfill ICP’s request. March 31 was the outside limit for providing the data -- clearly, it could have been provided earlier, as Chase offered to present its own analysis of the data (but not the data) on March 25. JPMC cynically waited to the last day, purportedly sent it out on that date (for delivery one day late) -- and then, when asked “where is the data,” claimed to be unable track it. But that’s Chase for you. To be continued.

Update of March 28, 2005: The San Francisco Chronicle of March 25, in which Morgan Chase (and formerly Bank One) spokesman Tom Kelly is quoted about the bank’s continuing enabling of payday lending:

“’If you look at certain income groups, there are people whom you would not want to extend checking accounts to, who don't handle credit well,’ said Tom Kelly of JP Morgan Chase, which finances three Cash & Go centers in Alameda County and numerous others throughout the state. While Kelly said JP Morgan does offer several alternatives for low-income communities, such as ‘payroll cards’ that work like ATM cards and don't require check cashing, he said, ‘If an organization was to ask us to stop doing business with these places, we could not do that.’”

Other banks have, and more still will. Morgan Chase stands increasingly alone...

Update of March 21, 2005: In strangely quiet news, J.P. Morgan Private Bank head Maria Elena Lagomasino resigned on March 14, a spokesman for Morgan Chase reluctantly confirmed on March 15. Lagomasino "announced her departure and she will be beginning a new chapter in her career," said Darin Oduyoye, then admitted that she hasn't specified what her post-Morgan Chase plans are. What happened? Morgan Chase’s 2005 earnings will be "much worse" than the $3.06 a share that Wall Street expects the No. 2 U.S. bank to report, BusinessWeek reported on March 17. Rising legal costs -- including those stemming from the company's $2 billion settlement announced on Wednesday over a WorldCom-related lawsuit -- and rising merger costs are part of the reason, BusinessWeek said...

Update of March 14, 2005: From the WSJ’s pre (WorldCom) trial run-down on JPMC: From 1999-2001, J.P. Morgan counted former WorldCom Chief Financial Officer Scott Sullivan, who pleaded guilty to fraud charges, as a member of its 31-member "national advisory board” ... The risks to J.P. Morgan stem mainly from a landmark December ruling by U.S. District Judge Denise Cote that has forced Wall Street firms to revisit their underwriting procedures. Under her decision, the banks bear the burden of proving they conducted adequate ‘due diligence’ before WorldCom's bond offerings and sufficiently disclosed the risks to investors.” By coincidence, Judge Cote is also hearing ICP’s FOIA cases against the Federal Reserve about the withholding of lists of subprime and payday lenders enabled by banks (regarding JPM Chase’s enabling of dozens of such high-cost payday lenders and other fringe financier, see below in this Report).

Update of March 7, 2005: They buy the strangest things -- and now sell some. On March 1, Morgan Chase confirmed leaked plans to spin off iJPMorgan Partners next year, while retaining One Equity Partners LLC, the private equity business it acquired along with Bank One. That unit’s purchases have included breweries and submarines, so the wackiness will continue...

Update of February 28, 2005: So here’s how Morgan Chase does business, as reflected in testimony at the Bernard Ebbers trial last week: when Ebbers asked a $30 million personal loan, J.P. Morgan Chase hesitated then said yes, on the condition that he also hire Morgan Chase to restructure his personal finances. (His WorldCom stock was then pledged to Bank of America, to cover another loan). At the meeting to convey the decision, Ebbers clenched his jaw, turned red-faced and was upset at "the way he was being spoken to" by John Straus, another J.P. Morgan official, Stephen Sloan testified. Morgan Chase eventually lent Ebbers $20 million. Nice of them, no?

Update of February 21, 2005: They buy the strangest things, second installment, from the Associated Press of Feb. 18: “Progress Energy Inc., which provides electricity to about 2.9 million customers in North and South Carolina and in Florida, Friday said it agreed to sell its rail-services unit to J.P. Morgan Chase & Co.'s private equity arm for $405 million. ..J.P. Morgan, the nation's second-biggest financial-services company, will handle the deal through its One Equity Partners LLC equity investment unit.” Yes, that’s the Equity One which beyond Polaroid has bought breweries and submarine plants (great combo, that)... Also last week, J.P. Morgan Chase & Co. agreed to pay penalties of $2.1 million to settle SEC administrative proceedings involving the (non-) retention of e-mails...

Update of February 14, 2005: In a move reminiscent of J.P. Morgan Chase, executives of subprime lender NovaStar stayed on the line following their Feb. 8 conference call, CFO Greg Metz complimented head of investor relations Jeffrey Gentle on his ability to screen callers. "He's the man," Mr. Metz said. "He doesn't let anybody get on that we don't want to take questions from." As Inner City Press has previously reported (see details in Report of April 23, 2004, below), JP Morgan Chase does this as well -- based on the name given when calling in, questions may or may not be permit. Violation of Reg FD, anyone?

Update of February 7, 2005: They buy the strangest things... From the Daily Deal’s profile last week of “J.P. Morgan Partners LLC, the private equity arm of J.P. Morgan Chase & Co.” we learn from spokeswoman Brooke Harlow of JPMC’s December sale of Japanese auto parts maker Rhythm Corp. to Washington's Carlyle Group” and of “Cabela's Inc., a Sidney, Neb.-based seller of hunting, fishing and camping gear. In November, J.P. Morgan unloaded $104 million of Cabela's stock at $21.60 a share... During the quarter, J.P. Morgan also cashed out of British movie theater chain Cine UK Ltd. and Banco Mercantil SA, a Venezuelan bank — more evidence of the firm's global reach. It reaped a hefty dividend from water transmission equipment supplier National Waterworks Inc. It partially exited drug maker Eyetech Pharmaceuticals Inc. And it scored unrealized profits in IPOs of movie maker DreamWorks Animation SKG Inc., semiconductor maker PortalPlayer Inc. and energy company Bill Barrett Corp.” And that’ s not even counting “One Equity Partners LLC, the private equity unit of Bank One” and its “deal to sell Polaroid Holding Co., the formerly bankrupt instant photography company, for $426 million.” Say cheese...

Update of January 31, 2005: Last week began with a report in the Wall Street Journal of JPM Chase eying a stake in emerging markets bank Standard Charter. Then, from the NY Post of Jan. 28: “J.P. Morgan Chase & Co. President James Dimon said it is unlikely it will buy an Asian bank until it is further along in extracting costs from its July merger with Bank One Corp.” So the extraction will continue...

Update of January 24, 2005: On the January 19 earnings call, James Jamie Dimon defended the dropping numbers, attributing them to technology spending. "We're building better credit-portfolio management systems, better intend-securities processing, which I think we to have, and there's a whole series of stuff and it's hard me to break it apart," he said. "A hundred major projects, a good chunk are merger-related; a good chunk have nothing do with that." Meanwhile, JP Morgan Chase disclosed that “predecessor banks” owned slaves as collateral. Chase flaks claimed “this is the first effort by a U.S. company to redress the wrongs of slavery.” Well, it’s something the Federal Reserve asked Chase about several mergers ago...

Update of January 18, 2005: on January 12, 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. Also on January 12, Morgan Chase sent out a memo announcing 1900 lay offs in Tampa. Chase plans to close its card service operations in Tampa by the end of 2005. The operation has been in Tampa since 1990. Ah, commitment to the community... Well perhaps in Philadelphia. Last week J.P. Morgan ex-vice president Anthony C. Snell pleaded guilty to charges that he arranged to have his company pay $50,000 to a close friend of Philly mayor John Street in a bid to curry favor with the administration. Hey, he didn’t do it for himself: he did it for Morgan Chase...

Update of January 10, 2005: Dow Jones of January 6 reported that “some brokerage reports suggested that JP Morgan Chase may be interested in buying a bank in the Southeast, with BB&T among the potential targets mentioned.” While the Bank One signs are still up? Morgan Chase announced on January 7 a proposal to buy for $129 million Vastera Inc., which “automates cross-border trade paperwork, notably goods manifests on cargo ships required by customs agents.” Paul Simpson, trade and emerging payments business executive at J.P. Morgan said: "What we are doing is actually extending our value chain for existing clients. [This proposed acquisition] expands our product offerings as well as expands our pool of clients. Changes in the security environment require the need for faster notice of what is being imported.” Strange business to be in...

Update of January 3, 2005: As the year closed, the SEC was examining whether JPMorgan Chase should have known that the Canary Capital Partners LLC hedge fund was making improper trades. Regulators could -- and should! -- contend that the bank "should have known" Canary and its principal executive Edward Stern were "at least engaged" in short-term trading that violated rules of many funds. So far, here’s JPM Chase’s response: "At the time that we were doing business, JPMorgan didn't know and had no reason to believe that Canary, its related entities or Eddie Stern were engaged in any illegal activity." They said the same of Enron...

Update of December 20, 2004: From the profile of Jaime Dimon by the American Banker’s Liz Moyer earlier this month: “’You don't want to treat people the way you wouldn't treat your mother or friend - whether it's transparency or service or a right way of doing business or who you do business with or the type of business you do,’ [Dimon] said. ‘We want that to be second nature in how people operate. We don't have to do things we don't consider good.’” How these lofty claims relate, for example, to funding and enabling payday and car title lenders is not yet clear... Meanwhile, last week JP Morgan Partners said it will buy chemical company PQ Corp.; it's main product is silicates, glassy materials used in highway paint, among other uses...

Update of December 13, 2004: JP Morgan Chase’s strange priorities and proclivities: throughout 2004, JPM Chase has been under fire for funding and enabling payday lenders. Among its defenses, to those who would listen, was that it wanted to keep doing business with check cashers, and that payday lending and check cashing are often intertwined. Then, from last Friday’s American Banker: JPM Chase “In July, SunTrust Banks Inc. said it would stop lending to check cashers and payday lenders, though it did not bar them from seeking deposit relationships. JPMorgan Chase said in September that it plans to exit the business by the end of the first quarter. ‘We were seeing increasing financial risks and lower profitability,’ said spokesman Thomas Kelly.” First, the American Banker has mis-reported SunTrust’s announcement (its response to ICP’s comments was that it would no longer lend to payday lenders or car title lenders). Second, when and where was it, that JPM Chase said it won’t lend to check cashers after March 31, 2005? And what, now, of JPM Chase’s (always bogus) argument that in order to serve check cashers, it had to continue with payday lenders?

Update of December 6, 2004: Who claimed that Morgan Chase, even beyond its ex-Advanta unit, is not engaged in predatory lending? CBS MarketWatch of Nov. 30 tells 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.” What was that about best practices, again? As with its support of payday lenders, Morgan Chase gets worse and worse...

Meanwhile, our favorite inside source has directed us to a Nov. 15 FT article reporting “All staff at JPMorgan Chase, as it now is, have recently received a little blue booklet outlining the principles that are supposed to guide them in everything they do. What is remarkable about the JPMorgan Chase document is the number of edicts: there are 123 in all. For students of modern management this booklet, called ‘One firm. One team. Be a leader,’ is a must-read - a perfect snapshot of management guff as it exists in 2004. ‘Strive to create a more inclusive work environment. Drive change. Recognize and celebrate achievements, big and small’ - to name just one-fortieth of the maxims staff are meant to follow every day. This is not the first time that JPMorgan Chase has shown itself to be a leader in the field of guff.” No, it’s not...

Update of November 29, 2004: Hitting a new low, in last week’s Bloomberg News article about the funding of payday loans and lenders (“JPMorgan, Banks Back Lenders Luring Poor With 780 Percent Rates,” Nov. 23), JPM Chase spokeswoman Calmetta Coleman is quoted that “the bank will continue extending credit to payday lenders. In June, JPMorgan donated $400,000 to the National Federation of Community Development Credit Unions to research alternative ways to make short-term loans to the poor. ‘We have heard the concerns of consumer groups,' Coleman says.” The article 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 Federal Reserve’s Morgan Chase-Bank One hearings. The bank says it has “heard the concerns of consumer groups,” but “will continue extending credit to payday lenders.” JP Morgan Chase enables predatory lending, and is itself a predator... We also note, here for the first time, that JP Morgan Chase makes secured loans, evidenced by UCC filings, to private prison companies, including the controversial Cornell Corrections Corporation -- an issue on which we (and others, it’s foreseeable) will be following up...

Update of November 22, 2004: Now it’s preemption-city -- the banks have all be merged into one (national) charter, as of Nov. 13. JP Morgan Chase customers nationwide found themselves with incorrect account transaction information on November 16, after a systemwide computer melt-down the night before caused more than 5 million checking accounts to remain stagnant. “Legacy” Chase pointed out that the computer flaw was limited to the (old) Bank One systems. But weren’t they supposed to be higher-tech? And, by November 15-16, wasn’t it all supposed to be one bank? Meanwhile, the divided bank “would like to move into retail banking in Europe and Asia at some point, most likely by acquisition, Jamie Dimon, chief operating officer, said on November 19. ‘We don't have European and Asian retail and consumer business and we'd like to,’ Dimon told a meeting of the Investment Analysts Society of Chicago. ‘It probably would not be de novo (creating a new brand from scratch) but by acquisition,’ he said, providing no time frame for such a move.” We’ll be there...

Update of November 15, 2004: Morgan Chase said Nov. 9 that it might be disciplined by NASD for failing to detect and prevent improper trading of mutual funds. NASD staff members recommended disciplinary action against the Bank One Securities Corporation, a unit of the Bank One Corporation that J.P. Morgan purchased in July, for lacking the supervisory system and written procedures needed to prevent so-called late trading of its funds... In other Morgan Chase scam news, see Crains -- “the issue of payday lending was in the spotlight leading up to the merger of J.P. Morgan and Bank One, which was completed in July. Activists were particularly critical of Bank One for making loans to payday lenders, which they said enabled the practice, and J.P. Morgan came under some fire for making the loans as well.”

And, from our favorite correspondent:

Subj:    Cazenove - "anomaly"? Not quite
Date:    11/8/2004 6:02:45 AM Eastern Standard Time
From: [Name withheld]
To:    MorganChaseWatch [at] innercitypress.org
Ah - the juggernaut trundles on, dragging Caz with it. Another great British institution goes the way of all the other great brand names acquired by Chase........or does it? I was most amused to read the following commentary in today's efinancialnews:
"JP Morgan Cazenove, the newly created UK investment banking partnership, will compete with JP Morgan in UK and European equity research, sales and trading when the joint venture opens for business.....Under the proposed structure of the joint venture, Cazenove will fold its entire secondary equities business into the new venture, but JP Morgan will continue to run its own UK and European equities business. The decision to keep the secondary equities businesses separate is an apparent anomaly, because research and distribution capacity are often critical factors in winning a corporate broking client."
Precisely, my dears. Which is why the joint venture would want to steer well clear of the lame duck which is JP Morgan's secondary business. Or could it be that Caz insisted that, in the event of a merger, the redundancy selections would be made on a merit basis instead of just selecting JPM heritage staff as usual? That would leave the JPM secondary equities bigwigs in a very vulnerable position. Obviously much better to
waste money running two competing operations if it means that the bunch of no-hopers in charge of equities at JPM get to keep their jobs. Shame they didn't extend the same loyalty to the Chase, Flemings and H&W staff as they extend to themselves...

Update of November 8, 2004: Morgan Chase buys into the (British) Queen’s broker: UK brokerage Cazenove last week announced a joint venture with J.P. Morgan Chase; there’s a 340 million pounds ($625 million) payout as part of the deal. The so-called King of The City, Mayhew, claimed that the partnership would enable Cazenove to continue to provide impartial advice, while meeting the changing demands of clients. "Our advice culture will be unimpaired, but our resources and reach will be greater," he told journalists, stressing that the partnership would be careful to avoid conflicts of interest.” But that’s a bit hard, with JPMorgan Chase...

Update of November 1, 2004: Morgan Chase goes to the movies -- from the Dow Jones newswires of October 26, “the European Union Commission Tuesday approved the acquisition by JPMorgan Chase & Co. and U.S. venture capital fund Apollo Management L.P. of Kansas City-based movie theater chain AMC Entertainment Inc.” For or with more information, contact us.

Update of October 18, 2004: In hype news-of-the-week, Jamie Dimon speaking Oct. 12 at the Economic Club of Chicago said Morgan Chase may look towards acquisitions, domestically and abroad down the road, specifying that the company sees opportunity for expanding its retail footprint in California and Florida, where it currently lacks a presence. Still-there spokesman Tom Kelly, trying to also promote and please his titular boss, pointedly noted that Harrison said while the company currently has a decent presence in developed nations in Europe and Asia, the company may see more growth in emerging markets in the new few years. Yawn...

Update of October 4, 2004: A telling hands-off policy: while J.P. Morgan Chase is proposing to buy a majority stake in the New York hedge fund Highbridge Capital Management, Morgan Chase would not manage the fund. For the record (and ongoing inquiries), “JPMorgan Fleming currently has $11 billion of hedge fund holdings -- including $3 billion in its own hedge fund, mostly invested in Europe and Asia, and $8 billion in fund-of-fund investments. It also offers other forms of alternative investments, including $9 billion of private equity funds, and it manages $18 billion of real estate investments.”

Update of September 27, 2004: Sometimes the spin of the revolving door is revealing. Last week J.P. Morgan Chase, beyond Dina Dublon’s departure, hired Republican ex-Congressman Rick Lazio as its über-lobbyist, stating that Lazio’s experience in government would help the company develop "constructive dialogue with Congress and the executive branch.” Translation? J.P. Morgan Chase is betting on Bush. Why else does a bank hand its whole lobbying shop over to a Republican politician, just five weeks before the presidential election? Dublon, meanwhile, claims it’s a matter of having “decided to step off the treadmill and take some time to explore the next stage of my professional career." If you say so.

Update of September 20, 2004: From the mailbag, a breath (voice) of fresh air

Subj: Groundhog Day?

Date: 9/13/04 6:27:09 AM Eastern Daylight Time

From: [Our favorite inside-JPM correspondent]

To: JPM-Watch [at] innercitypress.org

Rumors have reached me in my burrow that JPMorgan is in talks with Cazenove, the British merchant bank, to form a joint venture (see last week's Financial Times). I gather that it is proposed that Cazenove will have access to JPM's balance sheet and will retain control of their business while JPM gets access to the prestigious client list.

Ah, takes me back....remember when the great US behemoth, Chase, acquired fuddy-duddy, old-fashioned little British Flemings in order to get a European and Asian equities business? Remember how all the high-powered negotiators from Chase came to London and importantly thrashed out an agreement with the diffident Brit bankers who were stuck in the 19th century and ripe for the picking? Remember the fabulous deal they struck for the Chase shareholders?

A few months later, it leaked out into the local press that actually, the fusty little British bank had outwitted Chase in an embarrassingly major way. You see, internally, shares in Flemings had been trading hands at between GBP 10 and GBP 12; they were rather hoping that they would get GBP 20 from Chase; so they diffidently asked for GBP 30........and got GBP 28.

Of course, we all know what happened to Flemings. Chase did nothing with them, and three months later they acquired JPM, laid off as many Chase/Flemings/Beacon/H&Q investment banking people as they could, and the rest is history.

I wonder exactly how much Cazenove is going to screw JPM over? They are probably equally as wily as Flemings, if not more so: after all, it looks as though they are going to get the bottomless pockets without the lack of control. Since Lehman is also sniffing around, what's the betting that JPM is panicked into another really stupid deal?

Plus ça change, eh?

Meanwhile JPM Chase’s bungle-back from its IBM deal will cost it up to $106 million, analysts say... Again, who’ll pay? Dublon? ...

Update of September 13, 2004: Morgan Chase’s Wild Bill Harrison, having in years past mangled the (Franco-Belgian) last name of U.S. Open tennis champions, on September 11 didn’t even try to say the winner’s last name, leaving it at “Sweat-Lana”

Update of September 6, 2004: Question -- who's going to pay for JPM Chase's negligence in letting capital level slip, costing at least $30 million? (See American Banker of Aug. 31, pg. 1). Dina Dublon?

Update of August 30, 2004: Sleazy JP Morgan Chase in Ohio: the Olentangy Local School District might have to pay nearly $1 million to Bank One if state tax officials approve the company's tax-refund request. 'Obviously this is a dramatic hit to the Olentangy school district,' said Delaware County Auditor Todd Hanks. The Ohio Department of Taxation notified the county on Aug. 12 that J.P. Morgan Chase submitted a refund request for $1.14 million in personal-property taxes paid to the county as part of Bank One's 2002 tax bill. Of that amount, between $800,000 and $900,000 would come from the school district, said district Treasurer Andy Geistfeld. The rest would be owed by the county. 'We just passed a levy and budgeted for the next three years and it was already going to be a tight three years,' Geistfeld said. With the interest already accrued on the principal, Hanks said, the total refund that the district might have to pay is already more than $900,000. By the time the case is decided by the state, the sum owed could exceed $1 million. The personal-property taxes in question apply to Bank One's 2-million-square-foot Polaris operations center. The site is headquarters for Bank One's retail banking operation and its investment subsidiary, Banc One Investment Advisors. Bumbling JPM Chase spokesman Jeff Lyttle said the tax refund is being sought because an internal audit revealed the company paid personal-property taxes on assets in 2002 that 'had been disposed of and did not in fact exist at that time.' Bank One officials had told the Delaware County auditor's office in late 2003 there was a possibility the company would seek a refund, Lyttle claimed. He's the one who admitted that JPM Chase will fund anything that's not technically illegal, including payday lenders whatever their record...

Update of August 23, 2004: JPM Chase sleaze-of-the-week was the response to inquiries about breaking their superficial promise to abide by New York's and Illinois' anti-predatory lending laws. Crain's Chicago Business quotes a JPMC spokeswoman that JPM Chase views the "agreement, including the high-cost loan language, as a series of goals, not commitments. 'The document . . . lays out collective issues that we agreed to discuss on an ongoing basis,' she said in a prepared statement." And some are surprised... JPM Chase keeps on spinning: see, e.g., "First and Largest International Microfinance Bond Issued [but JPM Chase funds payday lenders]," by William Baue, SocialFunds and CSRWire.com, August 18, 2004.

Update of August 16, 2004: In further merger fall-out news, JPM Chase now "plans to close its mortgage-processing unit in Maitland [Florida] and eliminate more than 150 jobs in a cost-cutting move. ‘Market forces and cost-reduction efforts from the merger made this decision necessary," said Chris Spencer, vice president for communications in J.P. Morgan Chase's Southern region" -- who should get ready to explain JPM Chase’s continued funding of payday lenders... From Dow Jones of August 9: 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." Note: it’s JPM Chase and Bank One: a perfect storm...

Update of August 9, 2004: Still thumbing its nose at the SEC's Regulation Fair Disclosure, JPM Chase on August 4 provided a special "integration update" to Mike Mayo of Prudential Equity Group -- by Wild Bill himself! (Dimon met similarly with CSFB in July). This from the bank that, like a banana republic, chooses who can and cannot ask questions on its conference calls, while pretending to have answered all questions... Regarding the bank with the heavy-handed spin (like giving grants for alternatives to payday lenders while funding payday lenders), here's from PR Week of August 9 -- "Melinda McMullen, formerly SVP of communications and public affairs with Bank One in Chicago, has become the head of communications for retail financial services at JP Morgan Chase now that the merger of Bank One and Chase is complete. McMullen will remain in Chicago and oversee media relations, employee communications, and philanthropic efforts for the consumer-banking operations of the merged institution. Fred Hill, formerly head of marketing and communications at Morgan Chase, remains in that position in the merged bank." Note to Melinda: reign in Jeff Lyttle, and find a way to not have to defend the indefensible (e.g. the bank's ongoing funding of payday lenders, on the excuse they're related to check cashiers). But see this study. And see above. For or with more information, contact us.

Update of August 2, 2004: On July 26, JPM Chase issued a press release bragging that, in the entire year of 2004, it will open sixteen branches in the tri-state area around New York. Since many banks wouldn’t issue a press release about opened 16 branches in a year, one might assume that these sixteen would be in low and moderate income areas. JPM Chase’s press release admitted that "in the late '90s, banks including Chase closed branches as the result of mergers" -- for Chase, that was more than 100 branch closings, including at least 12 in The Bronx. So where, you ask, are these sixteen new branches of which Chase is bragging so much? Not in The Bronx, and mostly not in low or moderate income neighborhoods at all. The press release listed seven "locations that have recently opened: Englewood, NJ (55 W. Palisade Ave, NE)-- Hoboken, NJ (125 River St.)-- Lake Success/Long Island, NY (2335 New Hyde Park Rd.)-- Garden City/Long Island, NY (106 7th St.)-- Princeton, NJ (16-18 Nassau St.)-- Carnegie Hill, NY (181 East 90th St.)-- East Hampton, NY (35 Main St.)" and nine "that are scheduled to open by the end of the year: Howell, New Jersey-- Tribeca/Manhattan, New York-- Linden, New Jersey-- Manhasset/Long Island, New York-- Red Bank, New Jersey-- Midtown Manhattan, NY (Chrysler Building)-- Elizabeth, New Jersey-- Franklin Square/Long Island, New York-- Elmhurst/Queens, NY." That’s a total of four, of the sixteen, in New York City itself: three in Manhattan, and one in Queens. None, that is, in Brooklyn or The Bronx. And still they fund payday lenders and pawnshops...

From the editorial board of the Orlando Sentinel from their July 30 edition, "SunTrust was Right to End Business with Payday and Car Title Lenders" -- "SunTrust made its decision to cut ties with such lenders after a consumer group filed a complaint with the Federal Reserve opposing the bank's pending merger with National Financial Corp. of Memphis, Tenn. Among other complaints, Inner City Press/Fair Finance Watch said records showed SunTrust had at least 60 customers making payday or car-title loans. Announcing its decision, SunTrust cited the ‘potential reputational risks and consumer harm’ that could come from lending to such companies. How candid, and how refreshing. ICP believes SunTrust's decision could persuade other banks -- especially those seeking government approval for mergers -- to follow suit. Let's hope so." Thanks, Orlando Sentinel. And what does JPM Chase have to say? We’ll see.

Also last week, 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. Chase operates or has operated call centers in Ohio, Arizona, Colorado, Delaware, Florida, Illinois, Louisiana, Massachusetts, Missouri, Pennsylvania, Texas -- and New York, where a separate suit has been filed...

Update of July 26, 2004: Meet the new boss, more arrogant than the old boss: on the JPM Chase conference call on July 21, Jaime Dimon was asked if Chase would be open to working with American Express Co. and Discover Financial Services. Dimon responded, "Yes. Maybe. I wouldn't tell you. We'll (work with whomever) is best for J.P. Morgan Chase." He launched into a criticism of institutions (including the successor to his old subprime-lending employer, Commercial Credit) settling litigation about the corporate scandals centered on WorldCom and Enron. (JPM Chase’s liability in re Enron is even greater than Citigroup’s, mainstream experts were quoted last week). Dimon intoned of the litigation charge: "We looked at our own facts, our own circumstances, our own environment, our own assessments, our own probabilities." And, just because we’re big and we were involved doesn’t make us guilty, Dimon said -- while his spokesman in central Ohio, Jeff Lyttle, says they’ll lend to any business that is not under indictment (see below in this Report). Now SunTrust has said it won’t lend to payday lenders, but JPM Chase / Dimon (who was responsible for Bank One’s links with payday lenders) won’t change any of their policies (or apparently even look at them, unlike the run-on rant quoted above). Meet the new boss... Also on the call, Dina Dublon announced happily that JPM Chase is increasing to 12,000 from 10,000 the total number of jobs expected to be eliminated. "We don't expect that to change much," the new boss said.

Update of July 19, 2004: While still lending to high-cost payday lenders and pawnshops, and moving to preempt state consumer protection laws, last week JPM’s chairman in waiting Jaime Dimon announced he’s resigning as a director of Yum Brands, owner of KFC and Taco Bell among others. Now it’s Bill Harrison who will be fast food...

Explaining the specifics of the preemption move, bank spokesman Jeff Lyttle -- who previously said the bank will fund anything that’s not clearly illegal -- told the Columbus Dispatch that "company officials considered Ohio and Illinois for the new charter, but chose Ohio because of more-favorable laws here." And one day, if permitted, JPM Chase will outsource the whole charter to whatever country has the "most-favorable" laws, i.e. no protections at all for consumers. .

Update of July 12, 2004: Now JPM Chase is applying to convert to a national bank, to preempt state consumer protection laws, and to move its bank headquarters out of New York, to Ohio. Notice of the move was stealth: a small type legal blurb in the classified ads of the Columbus Dispatch newspaper. It's reminiscent of Chase's silence was it moved last Fall to charter a federal savings bank. ICP stumbled on the notice and commented; Chase claimed it was too late, but also said that it would keep its bank operations in New York, New Jersey and Connecticut under a New York State charter. Apparently, something's changed, and Chase wants preemption from state consumer protection laws for all of its business -- in fact, Chase tells the American Banker (July 12, hats off) that it "has decided not to use the thrift charter that it established this year," that "the national charter will allow the new bank, like Bank One and like all of our major competitors, to follow uniform national regulation rather than separate rules for each state in which we operate." Of course, the Office of the Comptroller of the Currency has done nothing, to date, about national banks' funding of payday lenders, pawnshops and car title lenders, a business that JPM Chase is involved in and defends. Chase claimed to Russ Wiles of the Arizona Republic, in an article entitled "Chase - Bank One Merger Review Airs Dirty Laundry," that "the two companies are committed to fighting predatory lending and... recently announced a $400,000 grant to work with credit unions in expanding alternatives to payday loans for people in a cash bind." Meanwhile, the two banks keep funding payday lenders nationwide, to a tune much larger than $400,000... The Arizona Republic article concluded: "given high scrutiny of megabanks these days, it's worth remembering that reputations matter. Top officials of the new firm might want to rethink their links to these less-savory lending areas." Yep..

Update of July 5, 2004: That Bill Harrison was willing, as reported, to pay $7 billion to keep his job for two years is sad, laughable, and outrageous. This reaction from our favorite in-Chase correspondent:

Subj: Surfacing again

Date: 7/1/04 8:44:07 AM Eastern Daylight Time

From: [Our favorite in-Chase correspondent]

To: ChaseWatch [at] innercitypress.org

Pip pip from your velvet friend. I noticed the comment on the $7 billion hole in

the JPM piggy-bank... $7 billion to keep Harrison? I mean, $500 million to buy Boisi was bad enough, but even if Bill followed my suggestion of just sitting quietly in the executive washroom all day and flushing $100 bills down the john, I don't think he could get through that much money in two years. Especially since he would probably have to be reminded how a john works, bless his little halfwit heart.

You may not have noticed in all the brouhaha about BancOne, but JPMorgan are

quietly ending their outsourcing arrangements with IBM. There was a great deal of trumpeting about the signing of this pact in January 2003 (and some redundancies, and a great deal of time, effort and consultants' expenses, although there was less trumpeting about those)

Now they've decided to bring it all back in-house. No doubt involving some redundancies, and a great deal of time, effort and consultants' expenses...oh, dear, am I repeating myself? Sorry. Sometimes following JPM's management decisions is like being in Groundhog Day (except without the part about learning from one's past mistakes). Wonder how much investment banking business they'll be getting from the Big Blue in future? Not $7 billion worth, I'd bet. Yee-ha for corporate planning!

Welcome back... Meanwhile, no word back yet from the Fed.

Update of June 28, 2004: ICP has filed with the Federal Reserve a formal request for reconsideration (and a stay) of the Fed's June 14 order: results will be reported in this space. Meanwhile, it is reported that Bill Harrison burned $7 billion in shareholders' money simply in order to hold onto his job for an extra two years... In another height of cynicism, J.P. Morgan Chase and Bank One last week claimed (via press release to be funding alternatives to high-cost payday lenders, with a $400,000 grant. But the two banks are playing a double game: they finance dozens of payday lending companies which charge interest rates over 300%. As Inner City Press documented at the Federal Reserve's merger hearing in April, the two banks have taken secured interests in, among others, First American Cash Advance, a payday lender with 330 offices in 11 states, Illinois Payday Loans, Inc., Discount Payday Loans (Colorado), Mister Payday of Kentucky, Inc, and First Cash Financial, including a top-ten pawnshop chain with 130 storefronts in 11 states. This enabling of predatory lending is what the two banks have a responsibility to clean up: no $400,000 grant outweighs the harm caused by two banks' own actions. We will be following up on this...

Update of June 15, 2004: After 5 p.m. on June 14, the Federal Reserve announced its approval of JPM Chase - Bank One, in a 63-page order that evades some of the key issues raised, by ICP and others, at the public hearings. Regarding the "concern that JP Morgan and Bank One Corporation [a]re financing unaffiliated lenders who provided subprime mortgage loans and alternative products such as payday loans" (Order at pg. 46-47), the Fed has almost nothing to say. The Fed recites, verbatim from JPM Chase's submissions, claims about safeguards for buying subprime mortgages. But regarding the banks' funding of payday lenders and pawnshops, this is all the Fed says:

"When providing warehouse lines of credit to lenders making tax-refund-anticipation and payday loans, JP Morgan and Bank One Corporation state that their credit evaluations of these types of lenders include, as applicable, the customer's reputation and other character-related issues, as well as any issues peculiar to the borrower’s business or operations that might affect credit risk. These policies and procedures are designed to reduce the likelihood that either organization will be involved in 'predatory' or abusive lending practices." (Order at Page 50, emphasis added).

JPM Chase said exactly that, and nothing more, in a response in March. At the same time, JPM Chase requested confidential treatment for the list of the subprime and payday lenders and pawnshops to which it and Bank One provided funding. Well, in light of the banks' purported due diligence on pawnshops and payday lenders, here's the list ICP compiled from publicly-available Uniform Commercial Code filings listing Bank One and/or JPM Chase as creditor: First Cash Financial, a top-ten pawnshop chain with 130 storefronts in 11 states; Illinois Payday Loans, Inc., Discount Payday Loans (Colorado), Mister Payday of Kentucky, Inc., and First American Cash Advance, a top-ten payday lender with 330 storefronts in 11 states which has been criticized for its high-cost lending, particularly to members of the military, according to the Washington Post of December 29, 2003, "Military Says Payday Loans Promote Fiscal Irresponsibility, Hurt Troop Morale." If this reputation passes JPM Chase's muster, what doesn't? Apparently nothing: here are some more of the fringe finance companies funded by the two banks:

National Pawn Brokers Outlet of Flint, Michigan; Moe's Pawn Shop and Gun Store of Columbus, Ohio; EZ Cash Advance, Pyramid Pawn of Danville, Kentucky; Instant Cash Advance, Inc., Casino Cash and Pawn, Inc., of New Albany, Indiana; Sunset Cash Advance Corp., Tomcats Pawn, Inc. of Bloomington, Indiana; Cash Till Payday Ltd., Don's Pawn Shop, Inc. of Dayton, Ohio; Cash - Ohio Pawn Shop of Columbus, Ohio; Gold & Diamond Exchange Pawn Shop, Inc. of Urbana, Illinois; Pekin Pawn of 17 South 2nd Street, Pekin, Illinois; Twin City Pawn & Gun of Uhrichsville, Ohio; Ameri Pawn of Painesville, Ohio; Jack's Pawn Shop of Chesteron, Indiana; Nitro Jewelry and Pawn of Nitro, West Virginia; Sharpes Pawn Shop of Bartlesville, Oklahoma; Big Easy Pawn Shop, Inc., of New Orleans, Louisiana; LaPlace Pawn Shop of LaPlace, Louisiana; Diamond Pawn Brokers of Waterford, Michigan; Affordable Pawn, Inc., of Prescott Valley, Arizona; Express Check Cashing, Inc. of Heath, Ohio; Famous Pawn, Inc., in the District of Columbia and in Baltimore; Bronco Pawn & Gun, Hornet Pawn & Gun, and Longhorn Pawn and Gun, Inc., all of Austin, Texas; and Top Dollar Pawn Shop.com L.L.C. of Jackson, Mississippi.

In New York City, JPM Chase is a major funder of check cashers. Simply in The Bronx: Claremont Check Cashing Co., All American Check Cashing Corp. in Soundview, Jackson Check Cashing Corp., Kimball Check Cashing Corp. of East Burnside Avenue; A&A Check Cashing Corp. of Williamsbridge Road; Dyre Check Cashing Corp.; and David's Money Centers of Rockland, LLC, of 3015 Third Avenue in the South Bronx.

In East New York, Brooklyn, Chase supports Sutter Avenue Check Cashing, Inc.; in Jersey City, Chase supports A&S Check Cashing, Inc. of Martin Luther King Drive. In Rochester, New York, JPM Chase supports Chester's Check Cashing Centers. In Texas, JPM Chase supports RAC Check Cashing, Inc.. ICP's exhibits also shown, and JPM Chase has neglected to explain or respond to, Chase's support for E-Z Living Rent-to-Own of Taylor, Texas.

ICP has stated, and reiterates: JP Morgan Chase and Bank One want to continue to profit from predatory lending that destabilizes lower-income communities, as long as their role in these businesses can be downplayed or concealed. That must end -- the Fed's order should be vacated and reconsidered; the Fed should pull back from its staff-driven trend of coddling predatory and payday lenders and the banks which support them -- like JPM Chase and Bank One.

Among the many other flaws and misstatements in the Fed's order: the Fed fiddles with numbers until it claims that a merger that would result in a monopolistic 47.1% market share of deposits (or more technically, a rise in the HHI Index of 459 points, to a hyper-concentrated 2421, Order at pg. 9) is not, despite all this, anti-competitive. The Order's footnote 29 recites troubling information ICP obtained from Oregon (Chase and false social security numbers) -- but the Fed does nothing about it. The same is true of Chase's Poconos mortgage fraud fiasco (note 67), and Fairbanks (note 68). EBT is confined to footnote 43, farming issues to note 49. In note 61, the Fed admits that Bank One is worse than other lenders in the Wilmington, Del. MSA, where it bought First USA -- but the Fed does nothing. ICP finds the Fed and its approval order, and JPM Chase, deeply flawed, and will as a first step be requesting reconsideration, during the 15 day period provided in the Fed's rules. Developing... Fed's order is here; see also, "Fed OKs JP Morgan Chase-Bank One Merger," by Marcy Gordon, Associated Press, June 14, 2004 (online here, via Boston Globe) For or with more information, contact us.

Update of June 14, 2004: High noon has arrived, at the Fed on JP Morgan Chase - Bank One. Two months after the public hearing in New York, at which the specifics of the banks' funding of dozens of payday lenders and pawn shops was presented, in front of (current) CEO Bill Harrison, the Fed is slated to vote on the deal. But the banks have yet to address the predatory lending issues; they've withheld their responses and battened down the hatches. We'll see....

Update of June 7, 2004: JPM Chase's Don Layton, who has had some responsibility for Chase's spotty retail lending record, jumped ship last week, saying "I have decided that directly managing a business is what I love to do. I want to look for other opportunities." It's predicted that the next to leap will be Dave Coulter...

Update of June 1, 2004: JPM Chase's attempts to downplay anticompetitive effects continue, most recently in a May 21 letter to the Federal Reserve, provided to ICP is heavy redacted form. Much of it revolves around the deposits book at JPMC's 712 Main Street, Houston office, including a large "corporate mortgage finance" account "derived in their entirety from its servicing operations, which are located in Orange, California." Why are the dollar amounts being redacted? How can the Federal Reserve countenance this? We'll see...

Meanwhile, on May 24 SEC Division of Enforcement branch chief Nina B. Finston acknowledged ICP's Regulation Fair Disclosure complaint about JPM Chase's refusal to take questions on its earnings call, while claiming that there were no more questions. Anthony J "Tony" Horan, who responded to ICP's complaint to JPM Chase and said he'd ask about attendance at the May 25 shareholder meeting, never did get back to ICP. Nor has JPM Chase responded on the fringe finance issues raised, which Harrison no-commented to the Chicago Tribune and elsewhere. At the May 25 meeting, Bill Harrison gushed that "I feel very, very good about the direction this company is going in." Yeah -- headlong into payday lending, RALs, and pawn and gun shops...

Update of May 24, 2004: As we go to press, word reaches us that Senators Durbin and, dare we say, Schumer, have written to JPM Chase and Bank One, requesting that the vague $800 billion pledge be spelled out, market by market. We'll see... The smoke and mirrors won't stop: fresh of buying William Daley to polish its Chicago face, JP Morgan Chase made noise last week that it'll sponsor the "opening of Millennium Park in downtown Chicago July 16-18." There will be tents for JPM-funded payday lenders, and pawn and gun shops, maybe even car title loans -- all courtesy of JPMorgan Chase... For or with more information, contact us.

Update of May 17, 2004: JP Morgan Chase and Bank One continue their ex parte lobbying of the Federal Reserve, including on antitrust: last week ICP received a copy of a curt letter in which JPM Chase's outside antitrust counsel notified ICP and another party that they'd be calling Fed staffers. Under the Fed's rules, timely commenters like ICP are supposed to be invited to participate in, or at least listen in on, such communications. We're still waiting... At our deadline, the WSJ reports that JPM Chase is buying former U.S. Commerce Secretary William Daley to head its Midwestern operations, to make it appear Chicago-friendly. Paying a lot for that -- while still supporting payday lenders and pawn and gun shops throughout the Midwest. Developing...

Update of May 10, 2004: In a letter to the Federal Reserve dated April 30, received by ICP last week, JPM Chase and Bank One purport to respond to testimony given at the public meetings. Amazingly, they entirely avoid the payday lending, pawnshop, check cashier and other fringe finance issues. It's both pathetic and arrogant, particularly when contrasted to CEO Harrison's recent letter to environmental groups. He "no commented" payday lending, and what the two banks actually do, to residents of low and moderate income areas, including in their two headquarters cities. For shame...

Also this: on May 5, the banks announced in an employee memo that, for example, Bank One will slash at least 185 Indianapolis-area jobs. Between July 1 and Oct. 31, 170 mortgage service workers in Fishers and 15 other employees in Bank One's offices in Downtown Indianapolis will lose their jobs, said Bank One spokesman Tom Kelly. In Ohio, Bank One announced another 120 job cuts at a mortgage-processing center in Findlay, which will close. The company also told 200 workers in its capital-markets and commercial-banking divisions that their jobs will be cut....

Update of May 3, 2004: While JP Morgan Chase continues to withhold the list of the subprime and payday lenders it funds, and while JPMC CEO Harrison continues to refuse to comment on the payday lending issues (while, paradoxically, claiming to environmental groups to be transparent), JPMC last week turned in a more than 100-page submission, which made some extraordinary admissions. A copy was sent to ICP and to only one other commenter (ostensibly because it dealt with antitrust). The submission, dated April 29, admits at pages 2 through 4 that "certain of the deposit data that JPMC used to prepare its SOD report for June 30, 2003 reflected deposits as of the close of business on June 27, 2003... The use of the June 27, 2003 deposit data from the NDS had an impact on the amount of deposits reported for almost every branch in the Bank's June 30, 2003 SOD report... Since learning of these errors, JPMC filed a corrected SOD report" with the FDIC. But even this first correction was incorrect, and subsequently amended. The result has been that, due to JPMC's misstatements, during the comment period the public did not have access to the accurate figures. It is imperative that the comment period be re-opened, ICP has now commented.

Similarly, JPMC now admits miscoding "accounts of certain high net worth individuals" and miscoding "deposits that were initially booked at the Plano, Texas office and subsequently moved to the 270 Park Avenue, New York City offices." Material portions of these admissions are redacted; ICP has demanded that information, as well as the subprime and payday lending list, which contains information that Chase's and Bank One's peer, National City, has just released to ICP. Chase has worst practices, including "least transparent practices."

Update of April 26, 2004: Two days after JPM Chase ordered its telephone screeners to block any calls with questions about predatory and payday lending from its earnings and merger update call, on Friday in Chicago, Bill Harrison was his normally-transparent self. Asked by the Chicago Tribune about the payday lending issues, Harrison said, "We are not commenting on that." No reason was given. The Trib also reported that "Bank One provides financing to some payday loan companies, said a spokesman for the Chicago-based bank, but he declined to provide any details." Harrison often talks (while his employees snicker) about "getting the cultural issues right" -- in this case, perhaps the cultures are consistent. Both are equally opaque and arrogant, on issues impacting low income communities. Harrison left the meeting room before any community organizations testified. Got to get those cultures right...

In further boundless cynicism, JPM Chase waited until April 23, the expiration of the Federal Reserve's comment period, to put in the mail to ICP data which ICP has requested, under a Federal regulation, a month earlier. JPM Chase had sent data to another group which submitted a request simultaneous with ICP's -- Chase is just sleazy, as "arbitrary," as the legal term of art has it...

Update of April 23, 2004 -- in the run-up to today's second Federal Reserve hearing, ICP on April 21 attempted to ask the banks' CEOs for specifics about their April 15 $800 billion pledge, including how much of it would be subprime lending. But, in violation of the letter and spirit of the SEC's Regulation Fair Disclosure, the question was refused, blocked, censored. ICP has filed a complaint with the SEC, and had now made the Federal Reserve aware of the issue -- and of JPM Chase's refusal to provide mortgage lending data to its critics, see below, ICP's testimony.

Good morning. This is testimony in opposition to this proposed merger, from the non-profit organizations Inner City Press and Fair Finance Watch, which are based in the South Bronx of New York City. ICP and its members believe that there are a number of reasons that this merger should be denied -- it would limit competition and raise prices; it would create another too-big-to-fail, scandal-plagued mega-bank, based for example on J.P. Morgan Chase's conduct in the Enron and stock research scandals. But in the five minute allotted, this ICP testimony will focus on predatory lending: from payday lenders to check cashiers, in The Bronx and elsewhere, then even pawn and gun shops nationwide. The banks' eleventh hour vague pledge does nothing to address these issues.

In Bronx County, the lowest-income county in Chase's headquarters city and state, Chase has closed more than a dozen branches, and now finances check cashiers in the neighborhoods in which it closed its bank branches. ICP's written submission have included as evidence copies of Uniform Commercial Code filings, both of Chase's financing of check cashiers and rent-to-own businesses, and of Chicago-based Bank One's financing of payday lenders and even pawn and guns shops. Here, not disputed by Bank One or Chase, are the names of just some of these Bank One-financed companies:

Illinois Payday Loans, Inc., and, separately, Cash Advance, Inc., both of 3022 Panther Creek Drive, Springfield, Illinois;

Gold & Diamond Exchange Pawn Shop, Inc. of 1004 West University Avenue, Urbana, Illinois;

First Cash Financial Services, a top-ten pawnshop chain with 130 storefronts in 11 states;

and First American Cash Advance, a top-ten payday lender with 330 storefronts in 11 states -- a company which has been extensively criticized for its high-cost lending, particularly to members of the military -- ICP has submitted for the record the Washington Post of December 29, 2003, an article entitled "Military Says Payday Loans Promote Fiscal Irresponsibility, Hurt Troop Morale." As you will hear in more detail from others today, including members of the Chicago CRA Coalition, Bank One is also directly engaged in controversial, high-cost tax Refund Anticipation Lending.

The two banks' responses on these issues, including since the April 15 public meeting at the Federal Reserve Bank of New York have been evasive, to put it mildly. The Columbus Dispatch of April 15, as submitted by ICP, reported:

"Bank One is aware of concerns about the type of businesses that Inner City Press cited and has a 'small number of lending relationships' with those firms, spokesman Jeff Lyttle said. 'We require our customers to comply with the law,' he said. 'If they comply with the law, we do business with them.' A number of community organizations will speak in favor of the merger at today's hearing and at one set for April 23 in Chicago, Lyttle said."

With all due respect to those who today testify "in favor of the merger," as Bank One's spokesman put it, ICP questions whether such testimony rebuts in any way the payday and other predatory lending connections that have been shown. ICP has returned to the research salt mines, and found that the connections are even more extensive than presented in ICP's April 15 testimony. Here are a few additional exhibits that ICP is today submitting by fax to the FRB in Washington:

an Ohio UCC filing, dated December 24, 2001, showing Bank One's relationship with Ameri Pawn of Painesville, Ohio;

another Ohio UCC filing, dated February 5, 2002, showing Bank One's relationship with Larry's Super Pawn, Inc., of Warren, Ohio;

another Ohio UCC filing, dated May 3, 2001, showing Bank One's relationship with Don's Pawn Shop, Inc. of 107 East 3rd Street, Dayton, Ohio;

a Michigan UCC filing, dated March 11, 2002, showing Bank One's relationship with Diamond Pawn Brokers of Waterford, Michigan

an Indiana UCC filing, dated May 23, 2000, showing Bank One's relationship with Jack's Pawn Shop of Chesteron, Indiana;

a West Virginia UCC filing, dated March 29, 2000, showing Bank One's relationship with Nitro Jewelry and Pawn of Nitro, West Virginia;

an Oklahoma UCC filing dated October 10, 2002, showing Bank One's relationship with Sharpes Pawn Shop of Bartlesville, Oklahoma;

[an Arizona UCC filing, dated January 18, 2001, showing Bank One's relationship with Affordable Pawn, Inc., of Prescott Valley, Arizona;]

a Louisiana (St. John the Baptist Parish) UCC filing, dated September 26, 2000, showing Bank One's relationship with LaPlace Pawn Shop of LaPlace, Louisiana; and

a Texas UCC filing, dated March 7, 2000, showing Bank One's relationship with Uncle Dan's Pawn, Jewelry & Sales, Inc. of Dallas, Texas.

There are many more, including A-1 Easy Pawn, Peoria Pawn, Southside Pawn, and 24-Hour Pawn -- I'm stopping there because as it turns out, Bank One just like J.P. Morgan Chase is also a funder of check cashiers, for example, QUITTIES CHECK CASH, INC. -- some of these names, you just can't make up -- TNT CHECK CASHING INC, and A-ACTION CHECK CASHING LLC. This last company is based in Houston, Texas -- where this merger would be anti-competitive, as ICP's comment along with the most recent FDIC deposit data show. Chase is trying to temporarily move billions of dollars of deposits out of Houston -- this gaming of the system, and of antitrust enforcement, should not be allowed.

ICP has provided a length list of Chase-funded check cashiers, in not only The Bronx but also in Texas -- where Chase also finances E-Z Living Rent-to-Own. Chase's financing of check cashiers, in low-income communities in which it has closed bank branches, is even more extensive than presented in ICP's April 15 testimony. Here are a few additional exhibits that ICP is today submitting by fax to the FRB in Washington:

a New York Department of State UCC Record, filed earlier this year on January 30, 2004, showing JP Morgan Chase Bank's relationship with A &T Check Cashing Corp. of 230 Flatbush Avenue, Brooklyn, New York -- JP Morgan Chase Bank has, as collateral, an interest in all "accounts receivable and proceeds;"

a New York Department of State UCC Record, filed earlier this year on January 28, 2004, showing JPM Chase Bank's relationship with Morgan Check Cashing of 473 Morgan Avenue, Brooklyn, New York;

a New York Department of State UCC Record, filed July 24, 2001, showing JPM Chase's relationship with Tompkins Express Check Cashing Corp. of 112 Tompkins Avenue, Brooklyn, New York;

a New York Department of State UCC Record, filed November 5, 2001, showing JPM Chase's relationship with Parkside Check Cashing Corp. of 214 Parkside Avenue, Brooklyn, New York;

a New Jersey Secretary of State UCC Record, filed June 13, 2003, showing JP Morgan Chase Bank's relationship with ACE Check Cashing Service of 312 Rahway Avenue, Elizabeth, New Jersey;

a New York Department of State UCC Record, filed September 15, 2003, showing JPM Chase Bank's relationship with A.T.N. Check Cashing Corporation of 122-11 Guy Brewer Boulevard, Jamaica, New York; and

a New York Department of State UCC Record, filed September 3, 2003, showing JPM Chase Bank's relationship with Manhattan Money Branch.com, Inc., of 403 East Third Street, Mount Vernon, New York - JPM Chase again takes, as collateral, an interest in all "accounts receivable and proceeds."

ICP's written comments analyze the growing disparities in Morgan Chasen's Home Mortgage Disclosure Act data, and document Morgan Chase's involvement in questionable subprime lending: from ongoing mortgage fraud litigation against Chase Manhattan Mortgage Corporation in the Poconos. to J.P. Morgan's work securitizing and serving as trustee on high-cost loans by Household Finance, New Century, IMC, and Centex, including five-year prepayment penalties which are widely characterized as predatory.

In the banks' March 23 response to the Federal Reserve , JPM Chase has requested confidential treatment for all lists of payday and other subprime lenders it and Bank One do business with, stating that "attached as Confidential Exhibit 10 are names of customers that JMPC believes are payday lenders or providers of refund anticipation loans and JPMC's business relationships with them." Bank One's list is labeled "Confidential" Exhibit 9. But ICP has assembled sample publicly-available UCC filings documenting the banks' secured interests in payday lenders, their premises and proceeds. Under the Freedom of Information Act, information which is "otherwise publicly available" cannot legitimately be withheld -- even if, as here, it is difficult or impossible for non-profit consumer protection organizations to go to every repository of public information in the country and compile the lists. JPM Chase's request for confidential treatment is meritless, ICP has contended, but is designed to keep these lists secret until after the hearings are over, and the Fed rules on the mega-merger applications. Among with a complaint ICP is filing with the Securities and Exchange Commission, under Regulation Fair Disclosure, for an April 21 violation of Reg FD, Inner City Press has appealed, under the Freedom of Information Act....

For several reasons, the FRB cannot responsibly close the comment period, unless it intends to forthwith deny or dismiss this merger application. The list of subprime and payday lenders with which JPM Chase and Bank One do business is STILL being withheld, without basis (since much of the information is "otherwise publicly available").

With this timely submission, ICP is informing the Board of a presumptive violation of the SEC's Regulation Fair Disclosure, 17 CFR §243.100, et seq., by JPM Chase (and Bank One), on April 21, in censoring questioning on a topic directly relevant to this proceeding. As recounted in a complaint ICP filed on April 21-22 with the SEC, the incident concerns an irregularity and violation of Regulation FD, its letter and/or spirit, which occurred in connection with the telephonic and in-person meeting conducted by JP Morgan Chase & Co. and Bank One on April 21, 2004, to discuss their pending proposed merger. ICP's executive director set forth the complaint in first-person narrative, experiential form:

At the appointed hour, 11 a.m. on April 21, I called in to the number listed in the companies' April 7 press release. An operator asked me for my name and affiliation. I stated: "Matthew Lee. Fair Finance Watch." I was connected to the conference, and heard JPM CFO Dina Dublon speaking about JPM's 1st quarter earnings.

Soon Ms. Dublon stated that questions would be taken, and an operator came on the line stating, "If you would like to ask a question, press Star One." I pressed Star One. From those of us on the phone, questions were taken from Andy Collins from Piper Jaffray, then from an analyst at AG Edwards, then from a Frank Lugori, identified as an individual investor. Answers were given by JPM officials Layton and Coulter, as well as Ms. Dublon. I was not allowed to ask a question.

After presentations by JPM CEO Harrison and Bank One CEO Dimon, again it was stated that questions could be asked by pressing Star One. This time I pressed Star One right away, and repeatedly. From those of us on the phone, questions were taken from Nancy Bush, and, for a second time, from Andy Collins of Piper Jaffray. It was then stated, at 12:25, that "there are no further questions on the phone." The CEOs gave their thanks; the line went dead.

I telephoned the number again: (973) 935-8505. I was referred to two different people, and then was told that a Judy Yip of JPM Chase would call me back. Eventually I received a call from a Tony Horan at JPM Chase. I asked him what criteria JPM Chase was using, to decide who could ask questions. Mr. Horan responded that questions were open to the professional investment community. I asked how that is defined, by Chase, and pointed out that a self-described individual investor was allowed to ask a question. I asked -- and now ask the SEC -- whether a standard that turns on size of shareholding is consistent with Reg FD and with the public interest generally. I pointed out to Mr. Horan that no one asked me if Fair Finance Watch analyzed companies, when I was connected to the call.

Mr. Horan then said, "Your name is well-known." I include this in the complaint because from this statement, I draw the inference that among JPM Chase's criteria in determining from whom to accept questions is a consideration of the identify of the questioner and the content of the question. I asked -- and now ask the SEC -- whether a standard that turns on the identify of the questioner or the assumed content of the question is consistent with Reg FD and with the public interest generally.

Mr. Horan then asked what my question would have been. I asked, regarding a lending commitment publicly announced by JPM CEO Harrison on April 15 at the Federal Reserve Bank of New York's public hearing on the proposed merger, how much would consist of subprime (higher-than-normal interest rate) lending, and how the size of the 10 year commitment ($800 billion) compares to JPM's and ONE's current lending volumes. Mr. Horan stated that he would endeavor to get and provide an answer to the question. By close of business on April 21, no further communication, much less an answer, was received from JPM Chase.

Whereas absent the pre-screening, the question(s) would have been publicly asked, and presumably answered; whereas, the statement that "there are no further questions" created the impression that the generally self-congratulatory tone of the presentation was and is an accurate picture of the progress of the proposed merger [FN On this point, Mr. Horan stated that he didn't disagree; his call and his candor (as well as his offer to "clear" access to the JPM Chase shareholders' meeting, currently scheduled for May 25) are appreciated -- but do not resolve the issues raised herein, or ensure any different action by JPM in the future], including the obtaining of required regulatory approvals -- the above-recited created harm on which the SEC should take action.

Relatedly, CEO Harrison stated that despite the absence of regulatory or shareholder approval, the two companies are already "working closely" together, including, specifically, making "joint pitches" for business, including for IPOs. Since this gun-jumping prior to regulatory or shareholder approval appears to raise other issues, including antitrust issues, we ask that this portion of this complaint be appropriately circulated within the [FRB], and that action be taken as quickly as possible -- including the immediate extension of the comment period.

JPM Chase has also attempted -- via disparate treatment -- to make impossible comment on its 2003 mortgage lending record. As evidenced by the attachments hereto, including a fax confirmation form, ICP on March 26, 2004, requested from JPM Chase its 2003 Loan Application Register, under the applicable rule. ICP explicitly requested the LAR in order to comment thereon on April 15 (and April 23). It is now April 23, and JPM Chase has not provided any of the requested LAR information -- while it has provided such information, even before April 15, to other simultaneous requester(s). Such behavior reflects badly on JPM Chase managerial resources (to be diplomatic), and should not be countenanced by the FRB. The comment period on this and the other grounds -- including the related Reg FD violations -- must be extended. On the current record, this merger should be denied. For or with more information, contact us.

Update of April 19, 2004: JPM Chase's vague 11th hour pledge, announced or rather muttered by CEO Bill Harrison on April 15, has hardly resolved the issues. Not only does the pledge leave unaddressed Bank One's and Chase's support for payday lenders and pawnshops, and predatory lenders -- even by its own terms, it seeks to include high-rate subprime mortgages and mortgages that are not relevant under the Community Reinvestment Act. It includes loans to individuals and in areas "at or below median income" -- that is, middle income. In order to come up with a number larger than Bank of America's $750 billion, JPM Chase decided to include everything but the kitchen sink, including subprime mortgages and mortgages to affluent individuals in middle income areas. For shame...

On April 19, ICP submitted supplemental comments to the Fed, noting among other things that while on March 11 the Fed asked the banks about their relationships with payday lenders, thus far the FRB has asked no questions about, for example, support for pawn shops, which like payday lenders and check cashiers are part of the fringe banking system which JPM Chase and Bank One are supporting and profiting from. ICP has demanded that the Fed now ask JPM Chase and Bank One about their support of pawnshops, including due diligence, standards, etc., by the same logic of the Fed's March 11 payday lending-related request and other recent requests -- for example, the Fed on April 1, following an ICP submission of UCC filings, asked Regions Financial and Union Planters Corporation about their relationships with car title lenders. (ICP has shown connections to Community Loans of America, more fully reported in ICP's Bank Beat Report). Car title lenders are alternatively known as title PAWN lenders, because in essence the consumer is pawning his or her car. Pawning is a financial transaction -- often a predatory one -- and there is no basis for not now asking Bank One and JPM Chase about relationships with pawn and gun shops, and check cashiers. The responses should be made public and comment allowed thereon, in an extended comment period. As ICP and numerous other witnesses stated on April 15 (and as ICP has formally asserted, including in its April 14 FOIA appeal), the withheld lists of JPM Chase's and Bank One's subprime and payday relationships should be released, before the April 23 public meeting, and before the comment period can close. This is also true in light of JPM Chase's and Bank One's eleventh hour, still-vague pledge, which does nothing to address the subprime, payday and pawnshop lending issues which ICP has raised since its first comment, issues which continue to develop... For or with more information, contact us.

Interim update of April 16, 2004 -- at the Federal Reserve's JP Morgan Chase - Bank One hearing in New York on April 15, JPMC's chairman Bill Harrison spoke first, reciting the proposed combined entity's 2300 branches in 17 states, its $1.1 trillion in assets -- and then saying, "That is why today we are announcing a $800 billion, ten year lending pledge." $675 billion of this would be mortgages; JPMC has decided to include any mortgage made to an individual or in a community "at or below median income." That is not the definition of low- or moderate-income (up to 50% and 80% of area median income, respectively). Nor does the $800 billion number address the predatory (including payday and pawnshop) lending issues raised by numerous commenters, including ICP with exhibits. It's unmistakable that had advocates not pushed and gotten a Federal Reserve hearing on the proposed merger, no pledge would have been forthcoming. No pledge was made before the comment period closed on March 15. Two weeks later, faced with increasing advocacy, the Fed reopened the comment period, and gave a two-weeks notice of public hearings. Only at the hearing, a month after it thought the comment period closed, did Chase make a pledge -- at the 11th hour so that no comment on it was possible, at least at the April 15 hearing. The April 23 hearing will be different...

On the question of payday lending (and pawn & gun shops), squarely raised by ICP's comment and exhibits, the American Banker of April 16 quotes a Bank One spokesman that "'We have ethical standards for all the companies we do business with and we think we have adequate standards today.' A spokesman for JPMorgan referred questions on payday lending to Bank One." But the Columbus (Ohio) Dispatch of April 15 reported:

"Bank One is aware of concerns about the type of businesses that Inner City Press cited and has a 'small number of lending relationships' with those firms, spokesman Jeff Lyttle said. 'We require our customers to comply with the law,' he said. 'If they comply with the law, we do business with them.'"

So that's these two banks' standards -- anything that's not illegal is fine with them. That's a long way from "best practices," and from the standards that JPM Chase claims to have (the same Columbus Dispatch article quoted JPMC spokesman Thomas Johnson that "'We do not support predatory lending in any way, shape or form.' The company has procedures that prevent it from writing, buying or backing loans with those characteristics, he said." That's just not true...

April 15, 2004 -- Testimony In Opposition to JPM Chase's Proposed Acquisition of Bank One Corporation at the Federal Reserve Bank of New York, April 15, 2004, for delivery 9:30 a.m.

This is the testimony of Inner City Press and Fair Finance Watch, which are based in the South Bronx here in New York City. There we have seen Chase close more than a dozen branches. Now, we find that J.P. Morgan Chase finances check cashiers in the neighborhoods in which it closed its bank branches; we have found, and demonstrated in written submission to the Fed, that Bank One supports and enables payday lenders and even pawn and guns shops -- a shadow world of fringe finance and predatory lending. We believe that there are a number of reasons that this merger should be denied -- based on Morgan Chase's conduct in the Enron and stock research scandals, it would create another too-big-to-fail, scandal-plagued mega-bank, and would limit competition and raise prices. But in the five minute allotted today, I'll focus on predatory lending: from payday lenders to check cashiers, in The Bronx and elsewhere, and even pawn and gun shops nationwide.

Inner City Press is today submitting for the record a series of Uniform Commercial Code filings which show that Bank One finances payday lenders both large and small. Here are a few examples:

First Cash Financial Services, a top-ten pawnshop chain with 130 storefronts in 11 states;

Illinois Payday Loans, Inc., Discount Payday Loans of Colorado; Mister Payday of Kentucky, Inc., and First American Cash Advance, a top-ten payday lender with 330 storefronts in 11 states -- a company which has been extensively criticized for its high-cost lending, particularly to members of the military. For that, see the Washington Post of December 29, 2003, "Military Says Payday Loans Promote Fiscal Irresponsibility, Hurt Troop Morale." As you will hear in more detail from others today, Bank One is also directly engaged in controversial, high-cost tax Refund Anticipation Lending.

The two banks' responses to date on these issues have been evasive, to put it mildly. In their April 7 response to the Delaware Banking Department, to which ICP has also commented, the banks have claimed that "although Bank One does not specifically target this market, it has made credit facilities available to a relatively small number of small- and middle-market consumer finance lenders whose predominant business is payday lending."

This statement was and is misleading. Far from being limited to "small" or "middle-market" payday lenders, Bank One finances at least two top-ten payday lenders: First Cash Financial and First American Cash Advance. After receiving the banks' April 7 response, Inner City Press went back to the research salt mines, and in short order found evidence of dozens more such unseemly relationships, including beyond payday lenders, with pawn and gun shops. Here from ICP's exhibits are the names of only some of the fringe financiers that Bank One funds and enables:

National Pawn Brokers Outlet of Flint, Michigan; Pyramid Pawn of Danville, Kentucky; Moe's Pawn Shop and Gun Store of Columbus, Ohio; Instant Cash Advance, Inc., of Miami, Florida; Indiana's Casino Cash and Pawn, Inc.; Sunset Cash Advance Corp.; Tomcats Pawn, Inc. of Bloomington, Indiana; Cash Till Payday Ltd; Bronco Pawn & Gun, Hornet Pawn & Gun, and Longhorn Pawn and Gun, Inc., all of Austin, Texas EasyCash of Pawn; Famous Pawn, Inc., in DC and in Baltimore' Big Easy Pawn Shop, Inc., of New Orleans, Louisiana; and Ohio's Express Check Cashing, Inc..

There are many more; I'm stopping there because J.P. Morgan Chase, too, is an enabler not only of predatory mortgage lending, but also fringe finance. Just in The Bronx, we have seen Chase close more than a dozen branches. Now, we have found that J.P. Morgan Chase finances check cashiers in the neighborhoods in which it closed its bank branches. We are today submitting recent UCC filings -- for example, one filed last month on March 4, 2004, showing JP Morgan Chase Bank's relationship with the South Bronx's Claremont Check Cashing Co at 510 Claremont Parkway in the Bronx, on the corner of Third Avenue. This is a neighborhood that has been left without a bank branch, next to a housing project with tens of thousands of residents.

We are submitting a UCC record filed November 20, 2003, showing JPM Chase's relationship with the South Bronx's Jackson Check Cashing Corp. of 603 Westchester Avenue in the Bronx, another commercial strip left without a bank branch.

Just in The Bronx, the UCC filings compiled by ICP show Chase's support for, and profit from, All American Check Cashing Corp. of 412 Soundview Avenue, Kimball Check Cashing Corp. of 101 East Burnside Avenue, A&A Check Cashing Corp. of 1488 Williamsbridge Road; Dyre Check Cashing Corp. of 3813 Dyre Avenue; and David's Money Centers of Rockland, LLC, of 3015 Third Avenue in the South Bronx.

In East New York, Brooklyn, Chase supports Sutter Avenue Check Cashing, Inc.; in Jersey City, Chase supports A&S Check Cashing, Inc. of 411 Martin Luther King Drive. In Rochester, New York, Chase supports Chester's Check Cashing Centers. In Texas, Chase supports RAC Check Cashing, Inc.. ICP has previously shown JP Morgan Chase's support for E-Z Living Rent-to-Own of Taylor, Texas.

ICP's comments document Morgan Chase's involvement in questionable subprime lending: from ongoing mortgage fraud litigation against Chase Manhattan Mortgage Corporation in the Poconos. to J.P. Morgan's work securitizing and serving as trustee on high-cost loans by Household Finance, New Century, IMC, and Centex, including five-year prepayment penalties which are widely characterized as predatory.

In the banks' March 23 response to the Federal Reserve , JPM Chase has requested confidential treatment for all lists of payday and other subprime lenders it and Bank One do business with, stating that "attached as Confidential Exhibit 10 are names of customers that JMPC believes are payday lenders or providers of refund anticipation loans and JPMC's business relationships with them." Bank One's list is labeled "Confidential" Exhibit 9. But ICP has assembled sample publicly-available UCC filings documenting the banks' secured interests in payday lenders, their premises and proceeds. Under the Freedom of Information Act, information which is "otherwise publicly available" cannot legitimately be withheld -- even if, as here, it is difficult or impossible for non-profit consumer protection organizations to go to every repository of public information in the country and compile the lists. JPM Chase's request for confidential treatment is meritless, ICP has contended, but is designed to keep these lists secret until after the hearings are over, and the Fed rules on the mega-merger applications. Inner City Press has appealed, under the Freedom of Information Act, and is demanding that the comment and review periods be extended until the banks' lists of payday and other subprime lenders are released. On the current record, this merger should be denied. Thank you for your attention.

Note: Since January 20, Inner City Press has submitted to the Federal Reserve Board comments and exhibits in opposition to this proposed merger. See below in this Report.

Update of April 12, 2004: late on April 9, the Federal Reserve released its agenda and witness list for the April 15 public hearing on JPM Chase - Bank One. Witnesses, ostensibly one per organization, were told in a cover letter to limit their remarks to five minutes, "due to the number of speakers and panels that will be participating in the proceedings." But a comparison of the witness list with JPM Chase's own list of its self-selected Community Advisory Board (CAB) shows that JPM Chase has stacked the witness list with members of its CAB, many of whom work for organizations that are funded by JPM Chase. Fully 22 of the witnesses are on JPM Chase's CAB -- so, adding only these and Chase's two "official" witnesses, two hours of testimony will be Chase's.

Beyond the 22 Chase CAB members -- simply for example, all five witnesses on Panel Ten are on Chase's CAB -- number other witnesses either work for organizations funded by Chase, or seem only tangentially related to considering the proposed mergers affects on CRA performance and service to low-income consumers, including the predatory and payday lending issues that have arisen. There's a witness who's affiliation is listed as "C-Town Supermarket / NSA" (C-Town is a for-profit supermarket chain); there's a lawyer with the for-profit firm of Godwin Gruber, LLP. Witnesses are flying -- or being flown -- in from Florida, Ohio and Texas.

To be clear: no one, at least not ICP, disputes that Chase has provided support to certain non-profit organizations. That's not in dispute. Since Chase has chosen to call in these favors, with the effect of limiting the time available to more independent and critical witnesses, it will have to be asked, at the hearing, whether those supporting JPM Chase are, in fact, endorsing payday lending, pawnshops, and the rent-to-own and check cashing businesses that JPM Chase supports, in inner city areas. This will be asked, too, at the Delaware public hearing on the proposed merger, on April 13 -- which we'll report on here mid-week, watch this space...

Update of April 5, 2004: To the Federal Reserve, ICP has demanded that sufficient time be given at the coming public hearings to the subprime lending issues which ICP has raised since its first comment, but which JPM Chase and Bank One have refused to substantively respond to, except in purportedly "Confidential" exhibits to their March 23 submission. The FRB staff on March 11, 2004, posed questions to JPM Chase and Bank One. Questions 3 and 4 are about subprime lending; JPMC's response, at 35, refers to "Confidential Exhibit 8," a list of subprime lenders JPMC does business with. This list -- like purportedly Confidential Exhibits 4-15 -- is withheld in full, without any showing that it does not contain information that is otherwise publicly available (in SEC and UCC filings and elsewhere), nor any showing of competitive harm.

In fact, JPM and Chase have in the past made public lists of subprime lenders they do business with -- for example, in November 29, 2000, letter to the New York Banking Department, by this same outside counsel (in a chart headed "Chase Securities Lead and Co-Managed Business," including Conseco, Block Mortgage, Option One, Green Tree, Saxon and Centex, which ICP has submitted to the FRB). How can it be that JPM Chase is trying to be even less transparent now, in 2004, than it was in 2000, despite the increasing centrality of questions of (and JPMC's increasing, unverifiable claims about) predatory lending? Others of JPMC's peers have made public lists of subprime lenders they do business with. The only purpose of this withholding in full, it appears, is to deny the public the right to comment to the FRB on the list, and JPMC's claims to not do business with predatory lenders, prior to the public meeting. This cynical strategy cannot be countenanced -- on March 29, ICP submitted a FOIA appeal / request, demanding that all improperly withheld portions be released prior to the public meetings...

Update of March 31, 2004: ICP/Fair Finance Watch has asked the members of the New York Banking Board to do their duty, for New York consumers, and fully scrutinize JPM Chase's enabling of predatory lenders, Bank One's support of payday lenders, and other merger impacts that are being reviewed in Illinois, Delaware -- but not, for now, New York. Will they do their duty?

The Federal Reserve Board on Friday afternoon announced two public hearings, on April 15 in New York City and April 23 in Chicago. The announcement came 11 days after the Fed closed the comment period, and one day after an article by the American Banker newspaper's intrepid reporter Liz Moyer, noting that " As of Wednesday 95 comment letters on the Bank On deal, most of them negative, had poured into the Fed since J.P Morgan Chase submitted its application," and quoted ICP as " flabbergast[ed]... What is the standard?"

Now that hearings have been scheduled, ICP has put in a formal request to JPM Chase for its 2003 mortgage lending data, broken down into subprime and prime, and for information about "safeguards, if any, for purchasing, securitizing and otherwise enabling (including through warehouse lending) other subprime lenders." Bank One's enabling of payday lenders will also be explored...

JPM Chase on March 26 claimed, in response to ICP's comments to the New York Banking Department, that it is foreclosing on only 4.43% of its subprime loans in Philadelphia (a market ICP has analyzed) -- but then discloses, in a footnote, that "data do not include cases where a JPMC affiliate acts as trustee of a securitization but CMMC is not servicing the loan." But it's the trustee who forecloses...

To the Federal Reserve, JPM Chase has been submitting nearly identical "responses" to comments, and has yet to respond on, for example, the enabling of payday lenders. Now with the hearings scheduled, JPMC will presumably HAVE to respond.

Update of March 22, 2004: So now we have to ask -- how can the Federal Reserve governors justify to themselves ignoring their recent BofA-Fleet precedent (two public hearings held on a $47 billion merger proposal), and not holding any hearings on JPM Chase - Bank One? JPM Chase's responses to comments are by rote, the same thing, letter after letter. It's not even clear if the Federal Reserve has asked JPM Chase any questions. Particularly heading into a March 25 Consumer Advisory Council where governor Gramlich and others will pretend to take seriously the GAO's admonition for the Fed to do more to fight predatory lending, the failure to ask JPM Chase any questions, the failure to hold a hearing, reflect a Fed out of control....

Meanwhile,, we must report: at one of the few state-level hearings on the JPM Chase - Bank One proposal, ICP/Fair Finance Watch called in to the Colorado Banking Board meeting on March 18, and was allowed to make an oral presentation (including on Bank One's funding of payday lenders in Colorado). Banking Board members and staff tried to say that they had no choice but to approve, under the narrow legal standard they apply. But if the Office of the Comptroller of the Currency stretches the law to take away jurisdiction from the states, how can a state like Colorado feel so constrained? A question for the Conference of State Bank Supervisors, perhaps -- one that we raised to a CSBS staffer, in Washington, on March 12, still without response....

Update of March 15, 2004: As the clock ticked toward the Federal Reserve's slated expiration of the JPM Chase-Bank One comment period, numerous requests for extension and for public hearings went in. Meanwhile, JPM Chase's executive vice president Mark Willis took questions at the Hyatt Regency on Capitol Hill, at a session on predatory lending at the National Community Reinvestment Coalition's annual conference. When asked (by Inner City Press) if the standards which Chase claims for its own subprime lending are extended to the subprime lenders for which JPM Chase securitizes, acts as trustee, and to which it makes warehouse loans, Mr. Willis said that he wasn't sure, but that it is "a good question," one that he will look into and then definitively answer. The interim answer was that JPM Chase aspires to and/or claims to have achieved such consistency in practices -- a proposition that was immediately met with skepticism, by interlocutor and audience. Among the inconsistencies are the imposition of mandatory arbitration by subprime lenders JPM Chase works with, their use of five year prepayment penalties, YSPs and other matters. At press time, it is unclear if and when the Federal Reserve will hold the multiply-requested public hearings. But there and/or elsewhere, the issues will be pursued...

The senior senator of JPM Chase's headquarters state was presented with evidence of Bank One's enabling of payday lenders, assertedly one of the senator's main concerns. What the senator will do is not yet known.

Update of March 8, 2004: The pressure, for public hearings and otherwise, is growing. In its February 23 comments to the Federal Reserve and others, Inner City Press began documenting Bank One's relationships with the ten-state payday lender First American Cash Advance. In response, Bank One and JPM Chase begrudgingly acknowledged the relationships (it was impossible not to, given that Inner City Press had obtained and disseminated Uniform Commercial Code filings). But very quickly, the two banks clammed up, and refused to identify any other payday lenders with which they do business, muttering "it's none of your business."

But it is the public's business, and a matter of public record (if one digs deep enough). As exhibits to a March 8 filing with the Federal Reserve, Inner City Press has included documentation of:

--an August 14, 2002, UCC filing showing Bank One's relationship with Instant Cash Advance Inc. -- the publication Dollars & Sense of March 1, 2003, reviews

"the loan application at a franchise called 'Instant Cash Advance: Chicago's answer for fast cash.' Applicants are asked to sign a pledge in fine print at the bottom of the page, effectively signing away their consumer rights in three ways:
* The applicant is pegged for direct mail and other marketing schemes including possible mail fraud and identity theft: I fully release all parties, companies their subsidiaries & employees, pastor present, from any and all liability for any damage that may result. My signature below indicates that for purposes of verification and qualification, I have voluntarily waived the protection of all rights to privacy laws.
* The applicant forfeits the ability to fight back if ripped off: Furthermore, I also voluntarily waive my right to pursue or take any legal action against Instant Cash Advance, employees past or present, subsidiaries or agents thereof.
* The applicant, not likely to fully understand what he or she is getting into, hammers a nail into his or her financial coffin: I fully understand that any information I provide found to be false or fabricated will be grounds for denial of credit with Instant Cash Advance. I agree that I have fully read this statement."

--an Ohio UCC filing, dated January 21, 2003, showing Bank One's relationship with Sunset Cash Advance Corp., 611 Bellefontaine Ave., Marion, Ohio (the Marion Star of February 4, 2003, reports that Sunset Cash Advance has at least seven payday lending branches in Ohio, and that it "is a division of Showplace Inc., a rent-to-own company and provider of home furnishings, electronics, appliances, jewelry and computers. The home office is located at 611 Bellefontaine Ave. );

--an Ohio UCC filing showing Bank One's relationship with EZ Cash Advance, 800 E. Walnut, Columbus, Ohio;

--another Ohio UCC filing showing Bank One's relationship with Cash Till Payday Ltd., and Always Payday, both of Columbus, Ohio;

--an Illinois UCC filing dated July 16, 2001, showing Bank One's relationship with Illinois Payday Loans, Inc. -- through Bank One in Mesa, Arizona;

--two Colorado UCC filings showing Bank One's relationship with Discount Payday Loans, in Colorado;

--a Kentucky UCC filing showing Bank One's relationship with Mister Payday of Kentucky, Inc.; and

--a Texas UCC filing show JPM Chase's relationship with E-Z Living Rent-to-Own.

Also regarding JPM Chase, ICP has submitted a representative review of recent foreclosure filings in Philadelphia, highlighting JPM Chase's many foreclosure, including as trustee on subprime loans serviced by the much-sued Fairbanks. ICP has reiterated its call for multiple public hearings, including in Ohio and Texas. On March 5, the Illinois Lt. Governor's Office called for hearings in Chicago and New York, including on issues of employment outsourcing. Here's an ICP/Fair Finance Watch summary of that, which ICP also submitted to the New York Banking Department as a timely comment opposing a JPM Chase application seeking to shift "unit investment trust" business to Bank of New York:

--In 2001, fresh off the Chase Manhattan - JP Morgan merger, JPMC moved 3,000 jobs to India. See, e.g., " Outsourcing: Time to act?" Lafferty's Cards International, January 15, 2004, Pg. 2
--In 2003, JP Morgan Chase went public with plans to move financial analyst jobs to India. See, e.g., "City Losing High-Paying Bank Jobs," The New York Sun, August 21, 2003, Pg. 9, reporting that JP Morgan Chase "expects to employ at least 40 stock analysts based in Mumbai, India, by the end of this year. Communications are so good that it is as good as having them in New York"

--In October 2003, it was leaked (by impacted employees) that JP Morgan Chase would be eliminating 1000 jobs in New York. See, e.g., "Chase Cutting 1,000 Jobs," New York Newsday , October 28, 2003, Pg. A3

--JP Morgan Chase's largest outsourcing, however, is the $5 billion, seven year contract it signed with IMB, to outsource 4000 jobs. See, e.g., "IBM Takes JP Morgan Jobs Under Umbrella," New York Newsday, April 21, 2003, Pg. A25. Reflecting JP Morgan Chase's thinking, Bank Technology News of February, 2003, reported: "There are immediate, significant economic benefits" to the outsourcing agreement, says John Schmidlin, CTO of JP Morgan Chase's enterprise technology services group and lead negotiator in the $5 billion outsourcing deal the company struck with IBM in December. Maintaining an independent function creates a high cost base that is not competitive, he says. "Whether the market increases or decreases that volatility needs to be managed in a way that will help our lines of business and our shareholders. ...For us it's a very compelling model, and I'd suggest it will be for others as well. You get to pay for what you use and when you use it, rather than pay for a build up of fixed costs."

--As relates specifically to JP Morgan Chase's Bank One proposal, the American Banker newspaper of January 28, 2004, "Parsing the IT Implications of JPM-Bank One," speculated on "whether the combined Bank One Corp. and J.P. Morgan Chase & Co. will emphasize in-house IT services and transaction processing -- which Bank One prefers -- or their outsourced equivalents, which are more common at J.P. Morgan Chase."

The issues are heating up...

Update of March 1, 2004: in a filing submitted today to the Federal Reserve, Inner City Press / Fair Finance Watch documents JPM Chase's enabling of the questionable subprime lenders Centex, Household / Decision One, First Franklin and NovaStar -- a lender recently subject to fines and a cease-and-desist order for "unauthorized mortgage broker activity." JPM Chase, meanwhile, has begun submitting responses, evasive on subprime issues (and not yet even addressing the payday lending issues ICP has raised). Chase's response to ICP's comments tries to get the Federal Reserve to rely on the Office of Thrift Supervision's conflicted approval of Chase FSB -- conflicted because the OTS had begun counting the still-only-proposed Chase FSB's assessment fees in the OTS's budget even while the challenged application was pending! To pursue that, Inner City Press last week wrote to the OTS challenging the agency's claim that its budget is "not a public document and is not publicly disclosed or shared with other government bureaus or offices." ICP has directed the OTS to the U.S. Constitution, Article I, Section 9, Clause 7 of which provides that "a regular Statement and Account of the Receipt and Expenditures of all public Money shall be published from time to time." There may be a need to litigate the issue...

Update of February 23, 2004: The Federal Reserve's comment period on JP Morgan Chase's proposed mega-merger with Bank One runs through March 15, at a minimum. Inner City Press / Fair Finance Watch has submitted a 21-page request for multiple public hearings (see below), has obtained and submitted into evidence copies of complaints against both copies, including Chase's high-cost subprime lending units, and has now raised the issue of Bank One's high-cost tax Refund Anticipation Loans, as well as Bank One's funding of payday lenders such as First American Cash Advance.

There are other issues as well -- for example antitrust (click here for Chase's bogus argument that its deposits in Houston shouldn't be counted in that market, of which the proposed combined bank would have a monopolistic 46% market share). Also, JPM Chase's and Bank One's Long Term Debt, by "Amount Qualifying as Tier 2 Capital" -- click here for Page One, and here for Page Two), the banks' Preferred Stock and Other Capital Securities, by "Amount Qualifying as Tier 1 Capital" (click here for the one and only page). While the beginnings of ICP's challenge have been reported in Crain's Chicago Business ("Consumer Group Protests Bank Deal; Cites concerns for minority and low-income customers") and elsewhere (Columbus Business First, American Banker newspaper, etc.), now that JPM Chase has applied, saying nothing about the predatory lending issues, the process will heat up. Below are ICP's comments (additional, agency-specific comments now been submitted in Delaware, West Virginia, Colorado, Tennessee and Texas). For or with more information, contact us.

OPPOSITION TO THE PROPOSAL BY JP MORGAN CHASE & CO. TO ACQUIRE BANK ONE CORPORATION: PETITION TO DENY AND HEARING REQUESTS BY INNER CITY PRESS / FAIR FINANCE WATCH

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 Bank One Corporation.

With this proposal, Morgan Chase -- which is the combination of four separate, formerly competing banks -- seeks to acquire Bank One, which is the combination of three major Midwest franchises: First Chicago, the old Banc One, and NBD. The proposed combination is, in context, anticompetitive, and not only in Texas (where, in Houston, the proposed combination would control a monopolistic 46.95% of deposits). Of much concern to ICP, both companies are engaged in standardless subprime lending (that is, in predatory lending), and disproportionately exclude low- and moderate-income (LMI) communities, and people of color, from their offers of prime-priced credit. Additionally, both companies' investment banks and private equity arms engage in standardless business, much of it environmentally and socially destructive.

An overarching and irrefutable theme to this Protest is that (Morgan) Chase gets worse, after every acquisition. Section II of this Comment analyzes JP Morgan Chase's insufficient and disparate service, at normal interest rates, to LMI neighborhoods and people of color, including an analysis of Chase Manhattan Mortgage Corporation's (CMMC's) mortgage lending in the most recent year for which data is available 2002 -- in which Chase was even more disparate than it was in 1999. (Bank One's 2002 lending is addressed in Section III.) This analysis also contains information regarding pending RICO litigation against CMMC (for fraudulent / predatory mortgages, in Pennsylvania's Poconos and elsewhere), and troubling allegation by, and findings of, the Oregon Department of Justice, which is just one of the four dozen states' regulators from which Chase's consumer finance units seek to escape, via a proposed federal thrift and preemption (see below).

Section III turns to an analysis of Morgan Chase and Bank One's cynical strategy for serving LMI neighborhoods and people of color: higher than normal interest rate lending, for home equity, mortgage, automobile and other loans. In 2003, JP Morgan Chase was among the top ten securitizers of subprime loans, according to the trade publication Inside B&C Lending of January 12, 2004 (which also names Chase Mortgage Finance as a top-ten "Subprime MBS Issuer" in 2003; CMF was named a top-ten subprime subservicer by the National Mortgage News of November 3, 2003). Particular emphasis is placed on Chase Home Finance -- and New Century, Centex, Fairbanks, Paragon Finance and the other questionable subprime lenders and servicers which Morgan Chase and Bank One enable, through warehouse loans, underwriting, trustee and other services. This section also contains some description of and quotes from the thousands of consumer complaints against Chase which ICP has received in recent months, both directly from consumers, and in response to Freedom of Information Act (FOIA) requests to the state regulators from which Chase's consumer finance units (and now Bank One's) seek to escape, via preemption.

Section IV analyzes the adverse social, environmental and human rights effects of JP Morgan Chase's (and Bank One's, including One Equity Partners') global investment banking and "private equity" businesses. Section V touches on the anticompetitive and other prospective effects of this proposal. In Section VI, ICP formally requests public meetings, and an evidentiary hearing, on JP Morgan Chase's applications, and contends that on the current record, these applications could not legitimately be approved.

II. JP MORGAN 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 three large banks competed with each other in providing retail banking and lending services: Chemical Bank, Manufacturers Hanover Bank, and Chase Manhattan Bank. In the Midwest, competitors included Detroit-based NBD, Columbus, Ohio-based Banc One, and First Chicago. Each time with ever-larger investment banking fees, the New York City banks consolidated, then in desperation bought the investment bank J.P. Morgan; the Midwest banks also merged, decreasing service in Columbus, Detroit and elsewhere. Now, the seven banks would be joined, under the proposal leaked and then confirmed on January 14, 2004 by JP Morgan Chase.

But (Morgan) Chase has grown worse and more disparate after each previous acquisition, including through branch closings and service reductions. For a South Bronx example of Chase's "draconian" practices, note that Chase closed its branch on Tremont and Washington Avenues in The Bronx, leaving no other Chase branch for twenty or more blocks, in any direction. This closed-down Chase Manhattan Bank branch, now being used as a church -- is across the street from ICP's headquarters office; "photo available upon request."

Chemical Bank's and Manufacturers Hanover's merger "led to 6,000 layoffs and more than 80 branch closings." See, Buffalo News, August 28, 1995. On the 149th Street and Third Avenue "Hub" of the South Bronx, the MHT branch closed. Chase, meanwhile, had confirmed its focus on the most affluent (and least minority) consumers; low-income communities suffered, and community groups began to raise their voices. 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.

Chase's focus turned increasingly to global and wholesale business, particularly investment banking. Chase acquired San Francisco-based Hambrecht & Quist, the U.K.-based investment bank, Robert Flemings Holdings, a stake in Australasian investment bank Ord Minnett, and the New York-based Beacon Group. This culminated in the acquisition of JP Morgan, a deal widely panned. There followed Morgan Chase's involvement in Enron and other corporate scandals, Morgan Chase's acquisition of more subprime lending business along with Advanta, and a subprime credit card portfolio from Providian, and rumors that Morgan Chase, despite its size, was ripe to be taken over.

Chase's Disparate 2002 Mortgage Lending, Grown Worse Since 1999

The most recent publicly-available mortgage lending (HMDA) data reported by Chase Manhattan Mortgage Corp. ("CMMC" or "Chase"), for the year 2002, show that Chase disproportionately excludes African Americans and particularly Latinos from its lending -- and that these disparities have grown worse through time, compared to Chase's 1999 HMDA data. Chase gets worse with each acquisition.

In 2002 in the Washington DC Metropolitan Statistical Area ("MSA"), for conventional home purchase loans, Chase denied loan applications from African Americans 4.94 times more frequently than applications from whites, and denied Latinos 2.51 times more frequently than whites. This is worse than other lenders in this MSA: the denial rate disparities for the industry as a whole in 2002 were 3.04 for African Americans, and 2.38 for Latinos. It is also worse that Chase's performance in the Washington MSA in 1999, when CMMC denied the applications of African Americans 2.96 times more frequently than whites -- this disparity rose to 4.94 by 2002.

Chase's higher-than-aggregate denial rate disparities are not explained by any greater-than-normal outreach with normal-priced credit to African Americans or Latinos. In 2002 in this MSA, CMMC made 1475 conventional home purchase loans to whites, only 127 to African Americans, and only 79 to Latinos. For the record, the aggregate industry in this MSA in 2002 made 11,902 such loans to African Americans, 6894 to Latinos, and 64,826 to whites. For these three groups, the aggregate made 14.2% of its loans to African Americans, and 8.2% to Latinos. For CMMC, the figures were much lower: 7.6% of loans to African Americans, and 4.7% to Latinos.

In the Boston MSA in 2002 for conventional home purchase loans, CMMC denied loan applications from African Americans 8.89 times more frequently than applications from whites, and denied Latinos 6.38 times more frequently than whites. This has grown worse from Chase's performance in Boston in 1999, when CMMC denied the applications of African Americans 2.34 times more frequently than whites -- this disparity rose to 8.89 by 2002.

Chase high denial rate disparities for African Americans are pervasive, coast-to-coast: in 2002 in the San Francisco MSA, CMMC denied the conventional home purchase loan applications from African Americans 4.48 times more frequently than applications from whites. Again, this has grown more disparate from Chase's performance in San Francisco in 1999, when CMMC denied the applications of African Americans 2.41 times more frequently than whites -- this disparity rose to 4.48 by 2002.

In 2002 in the St. Louis MSA, CMMC denied the conventional home purchase loan applications from African Americans 3.62 times more frequently than applications from whites. One again, this has grown more disparate from Chase's performance in 1999, when CMMC denied the applications of African Americans 2.95 times more frequently than whites -- this disparity rose to 3.62 by 2002. Chase gets worse with each acquisition.

Continuing with Chase's systemic disparities in the most recent year for which HMDA data is available: in the Raleigh-Durham NC MSA in 2002 for conventional home purchase loans, CMMC denied loan applications from African Americans 4.93 times more frequently than applications from whites, and denied Latinos 7.40 times more frequently than whites. This is much worse than other lenders in this MSA: the comparable denial rate disparities for the industry as a whole in 2002 were 3.41 for African Americans, and 3.28 for Latinos. Among these three groups, only 3.1% of CMMC's conventional home purchase loans in this MSA in 2002 were to African Americans (versus 11.2% for the aggregate); only 0.5% of CMMC's loans were to Latinos (versus 2.4% for the aggregate).

In Little Rock, Arkansas, CMMC in 2002, for conventional home purchase loans, denied loan applications from African Americans 3.06 times more frequently than applications from whites; in Richmond VA, 4.65 times higher; in Memphis, 4.19 times higher. In Tucson, Arizona, CMMC in 2002, for conventional home purchase loans, denied loan applications from Latinos 3.64 times more frequently than applications from whites. In the Dallas MSA in 2002, CMMC denied conventional home purchase loan applications from African Americans 2.4 times more frequently than those from whites. In the Detroit MSA in 2002 CMMC denied the refinance applications of African Americans 2.58 times more frequently than whites; in the Milwaukee, Wisconsin MSA in 2002, for conventional home purchase loans, CMMC denied the applications of African Americans three times more frequently than those of whites, and denied those of Latinos 2.18 times more frequently than whites. For refinance loans, CMMC denied the applications of African Americans 2.89 times more frequently than those of whites, and denied those of Latinos a whopping 4.72 times more frequently than whites. Chase's disparities are systemic.

Chase does not separately report HMDA data for its subprime lending unit(s), so it is far from transparent in this way. But, as simply one example -- one widely described as predatory and even fraudulent -- consider Chase's lending in the Poconos region of Pennsylvania. Consumer Reports of November 2002 reports that:

Starting in the mid-1990s, TV advertisements in New York City asking "Why Rent?" touted several large housing subdivisions in the Pocono Mountains of Pennsylvania. The houses, which cost about $ 150,000 and required only $ 1,000 down and low monthly payments, seemed like a great deal to low- and middle-income residents of the metropolitan area. Chase Manhattan Mortgage Corporation acquired many of the mortgages.
When homeowners like Hugh Robinson tried to sell or refinance their properties a few years later, they received some unwelcome news. Their houses were worth only 55 percent to 65 percent of what they paid, according to a complaint some homeowners filed. Others, unable to keep up with payments, were foreclosed. That the problem involved many more homeowners became clear in 2000, when Matt Birkbeck, a reporter for the Pocono Record, in Stroudburg, noticed that 5,000 properties, an unusually high number, had fallen into foreclosure.

More specifically, on this nexus of foreclosures and Chase's lack of standards in choosing its partners, resulting in the enabling of predatory lending, the Daily News of July 6, 2001, reported that

"While the county's overall population jumped by 44% since 1990, home foreclosures skyrocketed to 569 in 1999 from 120 in 1990 - a 374% jump.
Public meetings in early June drew more than 600 irate homeowners, all claiming they'd been ripped off by a handful of local developers working in collusion with appraisers and mortgage companies.
Last week, a group of residents filed a federal civil racketeering suit against the nation's biggest mortgage lender, the Chase Manhattan Mortgage Corp.... 'We vigorously deny the allegations put forth in this complaint,' said JPMorgan Chase Vice President Charlotte Gilbert-Biro."

One might expect Chase to respond that, following its spokeswoman's "vigorous[] den[ial]," it subsequently "agreed to reduce the amount owed on hundreds of residential mortgages in the Poconos, acknowledging that some of its loans were approved on homes sold at inflated prices. Chase Manhattan Mortgage Corp. sent a letter to nearly 300 homeowners this week offering to reduce the mortgages to reflect the current estimated market value of the property. Homebuyers could see their mortgages reduced by as much as $50,000. The offer comes as state and federal authorities investigate allegations of real-estate fraud in the Poconos." See, Bergen (N.J.) Record, April 6, 2002, "Mortgages Cut for Bilked Buyers." But that did not resolve the question of Chase's lack of standards. Nor has it resolved the (Racketeer Influenced and Corrupt Organizations Act, RICO) litigation. ICP has obtained (as your agency should) a copy of the November 18, 2003 First Amended Complaint; here's from ¶¶ 88-102 (see also, ¶¶ 39-44, 56-59, 64-68, etc.)

88. The Chase Defendants' role in the conspiracy began with the agreement by Spaner, as Regional Manager in charge of the Wholesale Office in Independence, Ohio, to enter into a transaction with the Percudani Defendants, through Chapel Mortgage, to purchase the mortgage loans that were ostensibly originated by Chapel Mortgage but, in reality, "table funded" by Chase, and that allowed the Percudani Defendants to reap enormous profits on the houses they sold to Plaintiffs at inflated prices as a result of the Defendants' fraud. The Chase Defendants at all material times knew that the Raintree mortgage loans that were being purchased were issued in connection with and secured by, homes sold under the "Why-Rent" program... Additionally, by no later than April 1999, the Chase Defendants had actual knowledge that the homes at issue were not worth their selling price or the prices for which they were originally appraised. On or about April 22, 1999, Chase received a Uniform Residential Appraisal Report from Philip B. Hubbard, a Chase approved appraiser, in connection with a possible refinancing of the Lesters' house, informing Chase that the homes being sold by the Percudani Defendants as part of the "Why-Rent" program were not worth the prices for which they were appraised during the loan origination process....Rather than jeopardize its lucrative mortgage business, the Chase Defendants chose to ignore their own independent appraiser's warning and continued to purchase the Raintree mortgages, knowing that they would be able to promptly "flip" the loans to Freddie Mac and Fannie Mae before the Raintree customers began to default.

93. In furtherance of the conspiracy, Chase provided funds to Chapel Mortgage in exchange for mortgage loans and Chase knew that these funds would be paid to the Percudani Defendants in order to satisfy the artificially-inflated purchase price of Plaintiffs' houses. This constitutes an overt act that furthered the conspiracy and permitted the fraud to be perpetrated.

94. In furtherance of the conspiracy, the Chase Defendants did not follow their normal underwriting procedures and due diligence procedures with respect to the loans originated by and purchased from the Percudani Defendants. This constitutes an overt act that furthered the conspiracy and permitted the fraud to be perpetrated. In furtherance of the conspiracy, Chase failed to confirm that purchasers rather than Raintree were paying their rents while accumulating the earnest money used for the purchase of their houses. Chase's acquiescence in the illusion created by the Percudani Defendants that homebuyers continued to pay their rents while at the same time accumulating the funds for down payments constitutes an overt act that furthered the conspiracy and permitted the fraud to be perpetrated.

96. In furtherance of the conspiracy, either during or immediately after the closing Chase received and adopted the HUD-1 Settlement Sheets that contained false statements including, but not limited to, illusory, non-existent earnest money, and unreasonably low tax figures (including the realty transfer tax) based on an assessment of undeveloped land.... Owing to intense scrutiny resulting from a heightened rate of defaults on Raintree mortgages, Chase was forced to abort its scheme with Raintree on or about December 18, 2000.

This has not resolve the question of Chase's lack of standards, and, separately, Chase's lack of sufficient compliance safeguards. Beyond the consumer complaints made part of the record elsewhere in this Initial Comment, ICP has been made aware by the Oregon Department of Justice (ORDOJ) of a significant breakdown in Chase's compliance, regarding false social security numbers. The ORDOJ has provided ICP with correspondence concerning CMMC and false social security numbers -- an issue that the state regulator received complaints about, and then, for whatever reason, allowed Chase itself to investigate. According to Chase Associate General Counsel Laura O'Hara's June 5, 2003, letter to ORDOJ:

"Chase conducted an investigation with respect to the allegations set forth in your Letter. We related the results of that investigation upon your agreement that it would not constitute a waiver of the attorney client privilege. As part of that investigation, Mr. Hernandez was asked to come to our New Jersey headquarters and was interviewed by two attorneys and a senior investigator from our Fraud Prevention and Investigation Department ('FP&I'). After a thorough and intensive questioning, we found no evidence that Mr. Hernandez had 'condoned the use of bad social security numbers'... When Chase was notified by HUD that there were possible invalid SSNs on the Cortez and Alejandro Sierra loans in 2001, these files were immediately referred to our Quality Assurance Department. That department determined that the SSNs were invalid and determined that the borrowers had supplied falsified documents to Chase... If he were applying for a loan today... we would have found material misrepresentation in connection with the SSN submitted and would have declined the loan. This would be reported as a borrower misrepresentation in the Suspicious Activity Report ('SAR') that we file with FINCEN."

Even the ORDOJ, in responding to the above, noted that

"It appears there were Social Security number problems in all three consumer files including Gonzalez which apparently you had not yet discovered... we have persons claiming different things... Chase is very quick or possibly too quick to act once a person in possession is shown to have a bad social security number... You indicate Mr. Hernandez himself investigated after an alert and found two numbers incorrect; but while he found the third one correct it looks like that is now called into question as well... Whether Mr. Hernandez ever in fact winked at the use of a bad number we'll never know though I know you believe the evidence is he did not. Still, three transactions is a lot."

ICP has been informed that, since this chain of correspondence, new testimony has come to light -- including to the awareness of the ORDOJ -- which may well broaden the scope of the problems ORDOJ received complaints about. ICP has received some of the underlying documents, including a handwritten statement by Jose Gabriel Quirino, inter alia that he was told that false SSN -- which he himself disclosed -- would not be a problem; the credit reports upon which CMMC relied, CMMC's "Loan Memorandum" -- which characterizes this process as "Full Doc" -- further investigative documents and correspondence of the ORDOJ, including one stating:

"the suggestion to a consumer that using a bad social security number will not be prejudicial... is a violation of our Unlawful Trade Practices Act... You mentioned the OCC; I could be corrected but I was told by someone and have been led to believe the [OCC] would not be in the picture here. I submit Oregon has a right to protect its consumers... we want an Assurance of Voluntary Compliance with Chase that this sort of alleged conduct will cease... I am concerned that if there are three possible instances of fraud there may be more. Part of any resolution would have to including a monetary effort to make things right with any consumers who have lost their property and their money."

To add to the nationwide mortgage lending disparities set forth above, in Oregon, in 2002 in the Portland MSA for conventional home purchase loans, CMMC denied loan applications from Latinos 4.48 times more frequently than applications from whites, and denied African Americans a whopping 11.9 times more frequently than whites (while disproportionately excluding African Americans from its outreach and lending).

The CRA ratings to which Morgan Chase cites are questionable, for a number of reasons. The regulators looked at the wrong things -- ignoring, for example, Chase's deep and multi-faceted involvement in problematic subprime lending, see below, Section III.

III. CHASE IS INVOLVED, IN MULTIPLE WAYS, IN QUESTIONABLE SUBPRIME (HIGH INTEREST RATE) LENDING, DISPROPORTIONATELY TO PEOPLE OF COLOR

While Chase refuses to separately report, in HMDA or otherwise, on its subprime loans, as noted, Inside B&C Lending of January 12, 2004, named Chase Mortgage Finance as a top-ten "Subprime MBS Issuer" in 2003. An indication of the size of CMMC's subprime lending operation, not apparently through its HMDA data, can be found in the securitization documents filed with the SEC on November 26, 2003, in connection with HOME EQUITY PASS-THROUGH CERTIFICATES, SERIES 2003-7. The Prospectus supplement sets forth " the historical delinquency, foreclosure and loan loss data for CMMC's portfolio of fixed rate and adjustable rate subprime mortgage loans which were originated or purchased by CMMC and subsequently securitized in asset-backed transactions (the 'CMMC Subprime Securitized Servicing Portfolio'). The CMMC Subprime Securitized Servicing Portfolio represents only a portion of the total servicing portfolio of CMMC." Ten of thousands of subprime loans are analyzed; your agency should obtain and review that Prospectus, and the securitization documents for Chase Funding Asset-Backed 2003-2, which will be further addressed at the requested public hearings.

The Department of Housing and Urban Development's ("HUD's") publication, HMDA Highlights (HUD Housing Finance Working Paper Series HF-009), states, Appendix D at 3, that "Chase Manhattan is a large manufactured home and subprime lender. Three Chase Manhattan entities have reported manufactured home or subprime loans to HMDA... The HMDA LARS of Chase Manhattan Bank, USA, NA included manufactured home loan applications for the fourth quarter. Subprime applications would be included in the LARS for Chase Manhattan Mortgage Corporation ['CMMC']. Chase Manhattan Mortgage Corporation did not have absolute numbers for subprime...".

As confirmed by other documents submitted herewith, Chase has a strategy or pattern of loudly denying that it is a major subprime lender, of seeking to obfuscate its high volume of subprime lending, including which your agency should inquire.

To assist in the inquiry your agency should conduct, here is a brief history of Chase's stealth growth in subprime: Crain's New York Business of August 2, 1999 ("Alarms Sound Over Predatory Loan Practices: Regulators Plan To Take Action As Big Banks Enter Shadowy Market"), reported that "Chase last year reorganized its subprime lending unit to better push such loans through its mortgage broker network... Chase's subprime lending volume grew to $1.5 billion in 1998, up from $800 million the year before, and is expected to increase again this year." By 1999, Chase more than tripled its subprime volume, to $3 billion, according to Sam Cooper, the Chase Manhattan Mortgage Corporation executive vice president who runs Chase's subprime division, Chase Manhattan Funding. See, Mortgage Banking, October 2000. See also, Los Angeles Times of May 13, 1999 ("Banks Moving Into Subprime Lending Arena"), reporting that "Chase Manhattan Bank... which quietly started offering these subprime loans a few years ago, today [is] actively marketing to consumers with credit problems."

Chase's lending includes, for two years now, the subprime lending operations previously owned by Advanta. On February 6, 2003, Fitch on Business Wire stated that Advanta Mortgage Corp.'s subprime operation was acquired by JP Morgan Chase... The loans in the Advanta Mortgage Loan Trust transactions are currently serviced by Chase Manhattan Mortgage Corp.". Also for the record, Chase's subprime lending (which it proposes to fold into a thrift, preempting state consumer protection laws) is not limited to mortgages. See, e.g., Automotive News of June 23, 2003, Fitch Ratings Downgrades Mitsubishi Credit's Debt, reporting that "Mitsubishi has tightened its consumer lending standards and enlisted Systems & Servicing Technologies, a subsidiary of J.P. Morgan Chase, to oversee approximately 85,000 outstanding subprime loans." Chase has been growing this subprime auto loan business: for example, the Assets Securitization Report of March 24, 2003, reported that "[t]he servicing rights of bankrupt Union Acceptance Corp. may officially be transferred to System & Servicer Technologies (SST), a unit of J.P. Morgan Chase, during a bankruptcy hearing scheduled for Tuesday, March 25. Although the transfer has gone through numerous postponements, if finalized, it is scheduled to close April 1, according to court records." See also, Financial Times of April 4, 2003, noting that "JP Morgan Chase has dipped its toe into the subprime waters by buying a credit card portfolio from Providian Financial."

In inquiring into Morgan Chase's effort to escape from state anti-predatory lending and other consumer protection laws, ICP has been receiving numerous complaints about the Chase entities -- CMMC, Chase Automotive Finance, etc. -- that Chase proposes to exempt from state consumer protection laws. For example:

"She bought a new house... Within the first month, the mortgage was to Chase. They immediately increased her payment, due to an escrow shortage..."

"Her husband died... For the past two months she has attempted unsuccessfully to pet a pay-off statement from Chase Manhattan Mortgage Corp. on a mortgage for her house in San Antonio. The loan has a life insurance policy and will be paid in full upon receipt of certain documents, including a payoff statement... The only number that they give to contact someone is a general customer service number (800-848-9136), it takes about 30 minutes to get through to someone to put her through to other numbers for help and then there is no answer or the number is busy."

"He has a mortgage loan with Chase Manhattan and he has credit life insurance. When he turned 60, three months ago," etc..

"Consumer states that his loan was not credited appropriately and now ha has a lot of late fees. States that this is not fair. He has been overcharged for the last time when it is their error" [Chase Automotive Finance]

"He received a call from an employee of Chase Automotive Finance tell[ing] him he was overdue on a loan... he asked someone named Cynthia for a copy of the history of the payments for the lease, she got rude and told him he was changing the story about his payment history. He says his credit is impeccable. He just wants proof the bill is due. He did not appreciate in the manner he has been treated during this whole ordeal."

Another sample complaint:

From: [] name withheld in this format
To: ChaseWatch [at] innercitypress.org
I, like many FHA subprime borrowers has a disastrous experience with CMMC... I refinanced with them around a year ago, but when I was rushed through the papers at closing (which occurred at my home -- no witnesses) and was totally unclear about what the terms of the loan actually were, I rescinded the transaction. I sent it on the
last day allowed to be covered under TILA, (it only has to be sent within 3 days, most people aren't aware of that) and it was confirmed delivered two days later. A few weeks later I got a bill... I tried to pay my previous lender thinking the loan legally belonged to them, they returned my check. I wrote Chase and sent them copies of the rescission statement and delivery confirmation thereof. I told them I refused to pay on the loan (saying I thought it might imply I accepted the predatory terms, which I did not) hoping it would make Chase transfer it back to the previous lender all
the quicker. They answered only with bills, late notices and default notices, which I answered back, in RESPA compliant form, stating my case and demanding my
loan be transferred back to the original lender. This went on for a good 6 months. Finally when I sent an email with the subject line Cease and Desist, I stopped receiving late notices etc. But my credit was still trashed and although I complained, Chase didn't do anything... I was finally reached by Chase's executive resolution
group, who immediately lied to me in print and refused to communicate with me in any other way than by phone... I reminded Chase that I have a speech / language disability that makes phone communication in such situations especially inadvisable. I had previously notified Chase of this. They were really trying to intimidate and take
advantage of me... Because of Chase, I couldn't even rent a car much less buy
one because of what they did to my credit...

ICP received a response from North Carolina Commissioner of Banks, stating that while CMMC "has claimed the status of 'exempt person' under the Act... such a person remains subject to the prohibition against engaging in the activities listed in N.C. Gen. Stat. §53-243.11. Between September 18, 2001 and September 18, 2003, the Commissioner received 26 consumer complaints against CMMC and two against its affiliate...". ICP also received a response from the Michigan Office of Financial and Insurance Services (OFIS), reporting against CMMC in Michigan 16 complaints in 2002, and 25 complaints in 2003. Among the summaries:

-Company overpaid property taxes & forced placed insurance consumer already had;

-Payments not properly credited, foreclosure;

-Company forced placed insurance & disputing escrow account balance;

-Consumer alleges company misrepresented interest rate;

-Alleges harassing phone calls, disputes loan's high interest rate and large monthly payment.

The Texas Attorney General's Office has mailed ICP a sampling of complaints against Chase; an enumeration of complaints, against Chase and peers, remains pending. But from the sample complaints:

-a consumer in San Antonio began complaining to Chase Manhattan Mortgage Corp. in 2002 about a derogatory report Chase had put on the consumers' credit report, without justifications. After numerous letters from Chase stating that nothing could be done (but containing the phrase, "I apologize that we did not meet your expectation"), six months after first complaining to Chase, the consumer wrote to the Texas AG's office, cc-ing Chase. Very quickly, Chase "sent an electronic notification to all major credit reporting agencies... requesting that they remove all references to a Chase Manhattan mortgage loan from your credit report." Again the stock phrase, "I apologize that we did not meet your expectations." But here's an expectation: that clearly meritorious complaints shouldn't take nearly a year to resolve...

Also, a sample complaint regarding a loan that CMMC bought, from Community Home Loan of San Antonio: "The first statement we received from Chase Manhattan filed to reflect a payment we had made to Community Home Loan... This check had cleared our bank on Dec. 20, 2002... We have made repeated attempts to get Chase Manhattan to credit our account with this payment but [CMMC] has not complied with our request... I suspect that this is more than a simple oversight and that my case is an example of an ongoing and widespread scam conducted by Chase Manhattan."

From the New York Banking Department, against Chase Manhattan Mortgage Corp., from October 1, 2000 to June 25, 2003, over 500 consumer complaints were filed. A small sampling:

6/25/03 Mortgages - Privacy Issues - Valid - 03 M 1573

6/19/03 Mortgages - Escrow account, non-payment of taxes from - Valid - 03 M 1533

6/16/03 Mortgages - Release of satisfaction - Valid - 03 M 1502

6/13/03 Mortgages - Release of satisfaction - Valid - 03 M 1491

6/12/03 Mortgages - Release of satisfaction - Valid - 03 M 1485

6/09/03 Mortgages - Payment not posted to account - Valid - 03 M 1453

Other complaints acknowledged as "valid," even by the New York Banking Department, were for "Foreclosure" (Valid, o3 M 236); "Loan Terms Changed" (Valid, 03 M 133); "Closing Delays" (Valid, 03 M 676); "Foreclosure" (Valid, 03 M 843); "Insurance Funds - Difference FDIC and Other" (Valid, 03 M 869); etc.

Morgan Chase As Purchaser of, and Underwriter, Trustee and Warehouse Lender for, Questionable Subprime Mortgage Loans

Even less scrutinized, to date, is Chase's involvement in questionable subprime lending through JP Morgan Securities, as underwriter, through its banks, as trustee, and through various units, as warehouse lender / enabler. In 2003, JP Morgan Chase was among the top ten securitizers of subprime loans, according to the trade publication Inside B&C Lending of January 12, 2004 (which also names Chase Mortgage Finance as a top-ten "Subprime MBS Issuer" in 2003). Among others, Morgan Chase has enabled Centex, IMC and others (the entire roster should be requested and obtained from Morgan Chase). Beyond its subprime underwriting and issuance, Morgan Chase is a major warehouse lender to questionable subprime mortgage lenders, having provided warehouse lines to, among others, Contifinancial, Aames Financial Corp. and United Companies Financial Corp.. Fairbanks, the controversial subprime servicer, announced in a June 17, 2003, press release that it "finalized with a lending group led by J.P. Morgan Chase a deal that offers financing for Fairbanks through Sept. 2004" -- JP Morgan Chase provided this financing while Fairbanks was subject to a (subsequently settled / acknowledged) predatory servicing investigation by the FTC.

Bank One purchases questionable subprime loans. As only one example, the Indianapolis Star of March 17, 2003 ("Hoosiers face bite of predatory lending"), reports:

When Sandy and Lawrence Washington's Eastside home was appraised in 2000 for nearly four times the amount they had paid in 1999, they were only too happy to refinance. But instead of easing their financial burden, it only got worse. The subprime lender, Paragon Finance, apparently never told the Washingtons their mortgage payments didn't include property taxes -- which led to an artificial lowering of their monthly bills until the county treasurer's office sent the mortgage company a hefty tax bill.

By then, Bank One -- which had assumed the loan from Paragon Finance -- decided to pay the overdue property taxes on behalf of the Washingtons and collect the back taxes and future taxes from them. As a result, the Washingtons' mortgage payment shot up nearly $150, to $584 per month. The Washingtons were taken aback by the increased payments. Being on a fixed monthly income of $1,268, the couple refused to pay the difference, saying they wouldn't have refinanced had they known the payments were going to take such a huge bite out of their meager income or that they could have struck a better deal to repay the county.

Bank One served them foreclosure notice last fall on charges of delinquency

The Wilmington News-Journal of August 10, 2003, reported that "in Delaware, officials say they are targeting financial institutions that unfairly target consumers. Officials currently are investigating the marketing practices of Bank One Card Services, formerly known as First USA Bank." Here is a preliminary review of some of the disparities in Bank One's 2002 mortgage lending record, in (for now) two MSAs. ICP has reviewed Bank One, N.A., Ohio's 2002 lending in New Orleans (where Bank One previous acquired Premier Bank). For conventional home purchase loans in 2002 in the New Orleans MSA, Bank One, N.A., Ohio denied the applications of African Americans 2.41 times more frequently than whites, and denied the applications of Latinos 2.85 times more frequently than whites. For conventional home purchase loans in 2002 in the Phoenix MSA, Bank One, N.A., Ohio denied the applications of African Americans 3.75 times more frequently than whites, and denied the applications of Latinos 2.3 times more frequently than whites.

Bank One, N.A. also operates, standardlessly, as trustee for subprime loans. See, e.g., Fitch's October 16, 2003 press release on Business Wire, regarding ACE Securities Corp. HEL Trust $842.1MM Series 2003-NC1: " subprime mortgage loans, with an aggregate principal balance of $852,838,925... Bank One, National Association will act as trustee." The loans in the pool were originated by New Century; here's a sample of New Century's 2002 lending record:

In the Nashville MSA in 2002, New Century made 108 refinance loans to whites, and 36 to African Americans, a ratio of three-to-one... in Milwaukee in 2002, New Century made 167 refinance loans to whites, and 77 to African Americans, a ratio of 2.17-to-one... New Century, in the Minneapolis MSA in 2002, made 881 refinance loans to whites, and 126 to African Americans, a ratio of 6.99-to-one. New Century, as it has grown, remains much more likely to target African Americans that other lenders are.

In 2000, after ICP expressed concerns about U.S. Bancorp's ties with New Century, using the 1999 data, see, e.g.,: "Protesters Vindicated as U.S. Bancorp Dumps New Century Stake," by Eileen Canning, Bridge News, January 29, 2001. But Bank One continues to enable New Century, including via Banc One Capital Markets. See, e.g., Asset Securitization Report of August 18, 2003:

Including New Century Financial data last month was the final piece of the puzzle for BOCM. In addition to New Century, Banc One has modeled the loans for AmeriQuest Mortgage, Bank One N.A., Impac Mortgage (hybrid ARM), Irwin Financial, Option One Mortgage, GMAC RFC, GMAC Mortgage (HELOC), and Saxon Mortgage. Although this represents almost all of the subprime mortgage and home equity markets, Banc One welcomes as many issuers as possible to participate. "Our goal is to have all issuers contributing data and then in turn allow the issuers to use the data for internal analysis," said Banc One's Glenn Schultz.

What standards do JP Morgan Chase and Bank One have, for enabling and doing business with subprime lenders? Apparently none. Your agency should inquire into this, including at the public hearing ICP is hereby requesting at the earliest possible time.

IV. MORGAN CHASE'S (AND BANK ONE'S) GLOBAL BUSINESS AND INVESTMENT BANKING IS STANDARDLESS, AND IS SOCIALLY AND ENVIRONMENTALLY DESTRUCTIVE

Morgan Chase's activities in connection with Enron were shameful, and militate against approval of this proposal to acquire Bank One. See such statements as that of CEO Harrison, in answering the U.S. Senate's Permanent Subcommittee on Investigations' July 25, 2002 questions, noting "that on at least one occasion, Mahonia declined to engage in an activity proposed to it by J.P. Morgan Chase that did not meet Mahonia's risk criteria." Or see Morgan Chase spokeswoman Kristin Lemkau, regarding the Enron / Slapshot deal:: "Each country has its own tax law. We were advised by two Canadian law firms that this was legal and appropriate under Canadian tax laws." A combined company, it appears, would do the same things again: only, it would be (further) too big to fail, and thus (further) get away with it. Morgan Chase's compliance violations are not limited to the United States. For example, Japan's FSA on Feb. 28, 2003, that it had ordered the brokerage unit of J.P. Morgan Chase & Co in Tokyo to suspend stock trading on its own account for 10 business days from March 3-14. The penalty against the Tokyo office of J.P. Morgan Securities Asia Pte Ltd was issued three days after a finding that the unit had manipulated market prices through irregular transactions involving exchangeable bonds.

Nor, of more import to ICP, is Morgan Chase's involvement in predatory lending is not confined to the United States. See, e.g., The Times of London, November 27, 1999, "Japanese lender orders debtors to sell their kidneys:" A former employee of Nichiei Co, Japan's leading lender to small companies, was arrested yesterday after being accused of telling a borrower and his wife to sell their kidneys to repay their debt.... Nichiei Co is no small-time loan-sharking business. With 2,200 employees and 220 branches, it is listed on the First Section of the Tokyo Stock Exchange along with Japan's foremost companies....Chase Manhattan has a 4.7 per cent shareholding." Emphasis added.

In mid-2002, Morgan Chase extended a $125 million "debtor-in-possession" loan to the Polymer Group, which describes itself as "the world's third largest producer of nonwoven fabrics [with] 25 manufacturing facilities throughout the world." What standards does Morgan Chase have for such lending, regarding employment practices? None.

Just as Morgan Chase appears to have few to no standards in its involvements in subprime lending, Morgan Chase has few to no environmental standards, in its involvement in resource extraction, from coal to mining. In late 2002, Morgan Chase announced a $300 million equity program with Tulsa-based oil and gas company Latigo Petroleum, for an exploration and development drilling program. Chase was the "lead arranger" of a 1.325 billion British Pounds loan to AES Corporation to acquire National Power's Drax coal-fired power plant. See, e.g., Institutional Investor, Inc.'s publication, Project Finance, November 1, 1999. Morgan Chase's CEO, William B. Harrison, even served as a director of Freeport-McMoRan Copper & Gold Inc.. As directly (and adversely) affects low income communities in the United States, today, Chase was a major part of the $7.5 billion loan for Allied Waste Industries Inc.'s acquisition of Browning-Ferris Industries Inc.. Both Allied and BFI have long been alleged to be engaged in environmental racism, including in their disproportionate targeting of waste transfer stations and the attendant pollution and toxins into communities of color. In the South Bronx, for example, BFI bought a controversial medical waste incinerator, and, in the following years, paid a $50,000 fine for pollution violations.

Bank One's One Equity Partners has controlled breweries, German submarine-maker Howaldtswerke Deutsche Werft, and French chemical storage company LBC; it has been sued for actions in connection with its buy-out (and carve-up) of Polaroid, by

thousands of Polaroid employees and retirees who suffered a crushing series of losses as the old company failed. Thousands were laid off, and employment shrank from nearly 9,000 at the start of 2001 to 3,700 at the start of 2003. The company eliminated retirees' lifetime healthcare and retirement benefits just before it filed bankruptcy. Disabled employees were fired and had their healthcare and life insurance benefits terminated. And most employees, who were required to take part of their pay as Polaroid stock and couldn't sell the shares until they left the company, saw the value of their retirement savings shrink as the shares fell to pennies.
When it bought the Polaroid assets, One Equity Partners declined to take over the company's underfunded pension plan...

These actions, too, raise questions about the dubious benefits, to communities or consumers, of this proposed merger. ICP requests public hearings, and that Morgan Chase's applications be denied.

V. ANTI-COMPETITIVE AND OTHER PROSPECTIVE EFFECTS OF THIS PROPOSAL; DEFICIENCIES AND MIS-STATEMENTS IN CHASE'S APPLICATIONS

This proposal would, ICP contends, be anticompetitive in a number of relevant product markets. Mechanically running HHI numbers will not be enough: market by market investigations are needed in connection with this proposed combination of the second and sixth largest financial holding companies in the United States. The anticompetitive effects are clear, under using the outmoded HHI methodology, in at least four markets in Texas: Dallas , Fort Worth, Austin and especially Houston, in which the proposed combined institutions would control a monopolistic 46.95% of deposits. But the anticompetitive effects would be felt in other markets. Morgan Chase's applications required a public hearing, and, on the current record even as to antitrust, should be denied.

VI. CONCLUSION

For the reasons set forth above, your agency should schedule and hold public hearings on Morgan Chase's proposal and applications, and, on the current record, your agency should stop / deny the proposed merger. 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

To be continued; developing... For or with more information, contact us.

Update of February 16, 2004: JP Morgan Chase filed its Bank One application with the Federal Reserve Bank of New York on February 6, or February 9 -- then revised it on February 10. In the run-up to widespread challenges to the application, Inner City Press filed a Freedom of Information appeal with the Federal Reserve Board in DC:

The FRB's determination letter states that 63 pages have been withheld in full. Among the documents provided is a redacted e-mail of Dec. 4, 2003, from Katie S. Cox to Betsy Cross, Beverly Smith, Melissa Clark, Pat Robinson and others, referencing an ex parte phone call to the attorney for JP Morgan, in which the FRB asked for "copies of correspondence between JP Morgan and the OTS." None of this correspondence was provided to ICP, despite the fact that the FRB's approval order references the OTS' approval, and the FRB considered this information as rebutting ICP's comments. These records must be provided, in response to this appeal. We also appeal from the redactions to the e-mails provided to ICP along with the Denial letter. For example, in the Dec. 4, 2003, e-mail, Ms. Cox states "The attorney also [REDACTED]."

The Fed's secret communications with JP Morgan Chase, including regarding the applications, must be released. Developing... Until next time, for or with more information, contact us

Update of February 9, 2004: The American Banker of Feb. 6 quotes a professor at Loyola University in Chicago: "The larger the firms, the more likely they are to capture the regulator, and the penalties the regulators impose are less effective." Hence, JP Morgan Chase's involvement in nearly every corporate scandal so far this decade... Morgan Chase and Bank One have begun churning out form letters to community groups; they've been asked about the loans to payday lenders, reported last week, but to that they have no answer. Well, they'll need to get answer soon...

Update of February 2, 2004: Columbus Business First of Jan. 30 reports that "since Bank One moved its headquarters from Columbus to Chicago in 1998, community development lending in Columbus has suffered... Bank One closed its Community Development Corp... As for the closing of Bank One Community Development Corp. [Jeff Lyttle, a Bank One spokesman] said, it coincidentally occurred as the bank moved its headquarters." Some coincidence...

We note the Federal Reserve Bank of New York's January 15, 2004, letter to ICP, stating that information forwarded to the Fed by the Michigan Attorney General's office "was determined not to be a consumer complaint... As you know, the OTS approved this application on November 28, 2003. Based upon these facts, our Consumer Complaint Unit will not process your letter as a consumer complaint." Well it'll be a protest, then...

Update of January 26, 2004: While our main focus, in JPM Chase-Bank One, is one Chase (and its predatory lending conduit, Chase Funding), it must be said that Bank One also enables predatory lenders. Take, for example, the 10-state payday lender First American Cash Advance. Bank One shows up as a UCC-secured lender to FACA's subsidiaries in Tennessee, South Carolina, Georgia, Arkansas, Florida and Texas. First American is a controversial company, to say the least -- even the U S. Army has declared it an "enem[y] at its gates," see Washington Post of December 28, 2003, " Army Launches Offensive Against Lenders; Military Says Payday Loans Promote Fiscal Irresponsibility, Hurt Troop Morale." A more detailed account of First American's practices was made public by a FACA employee, as recounted in the Charleston (W. VA) Daily Mail of April 29, 2002:

Ginger Moore began working for First American Cash Advance last June as manager of the company's St. Albans branch. She left earlier this month with a bruised conscience and an unpleasant aftertaste from her time with the company. Moore said she quit. First American, which makes payday loans, opened its first offices in West Virginia last summer. Now, there are offices at The Shops at Trace Fork, St. Albans, Huntington, Parkersburg, Beckley, Clarksburg, Fairmont and Elkins. Even though Moore holds a master's in business administration from West Virginia Wesleyan College, her training at First American "was like, 'Oh my gosh, what a wake-up call,'" she said.

The wake-up: First American charges interest that would equate to an annual rate of 938 percent on a seven-day, $ 300 loan... Earlier this year, Moore reached a conclusion. "I felt the interest amount was extremely high - a form of legalized loan sharking," she said.... Moore insists she is not a disgruntled employee. "I'm just glad to be out of that kind of environment," she said.... Moore said she contacted the Daily Mail because "consumers need to know about the interest they're being charged. "I am thankful that I am no longer an enabler in such a vicious cycle of greed targeted at those on fixed incomes and the low-income working class," she said.

Bank One is a secured lender to First American Cash Advance -- not once, or three times, but at least six times. Inner City Press is submitting UCC print-outs to the states at issue, specifically in opposition to the JPM Chase - Bank One proposed mega-merger. Developing...

The Office of Thrift Supervision, following Inner City Press' Freedom of Information Act appeal, released some information about its inclusion in advance of the proposed Chase FSB in the OTS' budget -- even while Chase's contested application was pending. The OTS' letter states that it has "determined to grant your appeal, in part... Unlike many federal agencies and offices, OTS does not rely on Congressional funding of its budget. Instead, assessments on, and fees paid by, the thrift industry fund OTS operations... the budget is not a public document and is not publicly disclosed or shared with other government bureaus or offices... In this instance, however, some protected information was publicly disclosed by the agency. As you noted in your request, a newspaper article indicated that an OTS spokesman had stated that the agency had take into account projected assessment revenue from one institution that was contemplating switching to an OTS charter... Once information is publicly disclosed, it is no longer entitled to Exemption 5 protection. In this case, I have accordingly determined to release a responsive portion of one of the withheld pages related to the inclusion of projected assessments from Chase FSB and Hudson City Bancorp in the projected fiscal year 2004 assessments."

So -- even while purporting to solicit and consider public comments on Chase's application to charter a savings bank and put its nationwide consumer lending into it, the OTS was already "banking" the assessment fees it would collect form Chase. This is no way to regulate financial institutions, particularly ones insured by the government and, behind it, the people... It confirms deep CRA-enforcement problems at the OTS, as well.

Meanwhile the FRB, by letter dated January 13, further extends its time to respond to Inner City Press' FOIA request about JP Morgan Chase, "in order to consult with another agency or with two or more components of the Board having a substantial interest in the determination of the request." We'll see..

Update of January 20, 2004: Inner City Press / Fair Finance Watch has just filed a series of challenges to JP Morgan Chase's proposal to acquire Bank One. ICP's comments, filed with the Federal Reserve in DC, with the New York Banking Department and regulators in more than a dozen other states, and summarized below, compare Chase's 2002 mortgage lending to its 1999 data, and find that Chase has gotten worse. ICP also obtained, since Jan. 14, the length 1st Amended Complaint in a serious RICO / predatory lending case against Chase, in Pennsylvania. Since Sept. 2003, ICP has been getting complaints against Chase from state regulators, n connection with Chase's attempt to preempt state laws by shifting its nationwide consumer lending into a federal savings bank; now, we've made similar requests for complaints against Bank One, and other Chase entities, to 18 state regulators. Developing (see above in this Report); for or with more information, contact us.

Update of January 16, 2004: in the day-after hoopla, what was lost (for now) was how communities and consumers are impacted. Experience in The Bronx, and elsewhere in lower-income New York, is that JP Morgan Chase has gotten even less accountable, and less responsive to community credit needs and fair lending, with each acquisition it has done. Chase has closed more than a hundred bank branches in New York, including twelve in The Bronx, and has gotten into high-cost subprime lending by buying Advanta, and as an investment bank. The previous Chase mergers include Chemical Bank, Manny Hanny, Beacon, JP Morgan, Advanta and now, it is proposed, Bank One. Bank One is the product of First Chicago, NBD of Detroit, and the old Bank One. Viewed in this way, seven top-twenty banks would be combined here into one, which would be, as the saying goes, too big to fail. Meaning, the government couldn't let it fail, and relatedly the regulators could barely crack down (see, e.g., Citigroup). There are many, many reasons to oppose this proposal... More to follow. For or with more information, contact us.

Update of January 14-15, 2004: late on Wednesday afternoon, after the news started leaking, JP Morgan Chase confirmed it has a proposal to buy Bank One, for $58 billion. In late 2003, Chase did a "corporate trust" deal with Bank One, while Chase was (and still is) trying to put its nationwide consumer finance lending, including subprime mortgages and auto loans, into a federal thrift to preempt all states' anti-predatory lending laws. J.P. Morgan Chase's normal interest rate lending is disparate, particularly to Latinos and African Americans, while Chase targets these groups with high-cost subprime loans, for which it seeks to escape state anti-predatory lending laws by shifting its subprime business into a federally-chartered savings bank. ICP/Fair Finance Watch will be challenging Morgan Chase's proposal, raising the issues Chase has been ducking for months. For now, just a few examples (and see above on this page).

Recently-released 2002 mortgage lending (HMDA) data reported by Chase Manhattan Mortgage Corp. ("CMMC" or "Chase") show that Chase disproportionately excludes African Americans and particularly Latinos from its lending. In 2002 in the Washington DC Metropolitan Statistical Area ("MSA"), for conventional home purchase loans, Chase denied loan applications from African Americans 4.94 times more frequently than applications from whites, and denied Latinos 2.51 times more frequently than whites. This is worse than other lenders in this MSA: the denial rate disparities for the industry as a whole in 2002 were 3.04 for African Americans, and 2.38 for Latinos.

In Tucson, Arizona, CMMC in 2002, for conventional home purchase loans, denied loan applications from Latinos 3.64 times more frequently than applications from whites. In the San Francisco MSA, CMMC in 2002, for conventional home purchase loans, denied loan applications from African Americans 4.48 times more frequently than applications from whites. If Chase's defense for this high denial rate disparity is the low level of its lending to African Americans, that raises other issues -- note also for refinance loans (at a greater volume), CMMC denied loan applications from African Americans 3.06 times more frequently than applications from whites. In the Dallas MSA in 2002, CMMC denied conventional home purchase loan applications from African Americans 2.4 times more frequently than those from whites. In the Detroit MSA in 2002 CMMC denied the refinance applications of African Americans 2.58 times more frequently than whites; in the Milwaukee, Wisconsin MSA in 2002, for conventional home purchase loans, CMMC denied the applications of African Americans three times more frequently than those of whites, and denied those of Latinos 2.18 times more frequently than whites. For refinance loans, CMMC denied the applications of African Americans 2.89 times more frequently than those of whites, and denied those of Latinos a whopping 4.72 times more frequently than whites. Chase's disparities are systemic.

Chase does not separately report HMDA data for its subprime lending unit(s), so it is far from transparent in this way. But, as simply one example -- one widely described as predatory and even fraudulent -- consider Chase's lending outside its CRA assessment areas, in the Poconos region of Pennsylvania... This will be frequently updated. For or with more information, contact us.

Update of January 12, 2004: Morgan Chase's lobbying spending for the first six months of 2003 $3.8 million, was sharply up from full-year 2002 ($4.7 million). Trying to avoid the repercussions of Enron, et al, sure. But also lobbying against state anti-predatory lending laws, while seeking to evade them by shifting its mortgage company into a federal thrift. That proposal is still on front of the Federal Reserve -- see below on this page. For or with more information, contact us.

For ICP JP Morgan Chase Watch Archives, click here. For or with more information, contact us.

Click here for Inner City Press' front page. ICP has published a (double) book about the JPMChase-relevant topics of subprime lending, and corporate fraud - click here for sample chapters, here for an interactive map (including regarding Chase), here for fast ordering and delivery, and here for other ordering information. The Pittsburgh City Paper of Dec. 11, 2003, says that the "novel Predatory Bender: A Story of Subprime Finance may, in fact, be the first great American lending malfeasance novel." Click here for that review; click here to Search This Site For or with more information, contact us.

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