Dear John: It seems we have underestimated the amount that Jamie Dimon has cost shareholders. JPMorgan Chase has been assessed an additional $680 million-plus in fines — most of that for the so-called “whale trade” in London but also $80 million for identity theft by the bank’s credit card group.
If you add it all up, Jamie has cost shareholders $28.2B in five years, which seems about equal to the total full-year profits for 2012. All the profits last year were [frittered] away.
There are profound implications of all this to shareholders, you and me — the taxpayers/business owners whom no one seems to be talking about.
One, JPMorgan needs to replenish this $28 billion for capital requirements required by the Basel rules.
Two, the bank now has $28 billion less to generate earnings — not just for 2013, but forever.
Three, since JPMorgan can take a tax deduction for all of this, that translates into $7 billion in lost IRS tax revenue, using the 25 percent tax rate.
Four, this means J.P. Morgan has much less to lend to small businesses to help reignite the economy.
Five, the Federal Reserve is actually financing this $28 billion, since JPMorgan can borrow from the Fed’s window to pay out these fines.
There has not been one clawback of anyone’s bonus, and from what was reported, last year’s bonuses were crazy-good. And it seems the word on the Street is, 2013 bonuses will be the same crazy-good.
I am baffled that not one large shareholder has questioned all this.
H.C.
Dear H.C.:
Why should I write a column about this? You just did. Thanks for doing my work for me.
I checked, and I don’t think the fines JPMorgan is paying are tax-deductible. But your points are still valid: Why do people put up with this sort of record?
The answer is simple: Jamie Dimon has the media charmed. He’s like one of those movie stars whose antics are portrayed as charming and quirky. He can do no wrong — until people get tired of him.
There were even rumors that he’d be a good Treasury secretary or head of the Fed. Dammit!
In any case, I did a story not too long ago about how the Cult of Jamie is turning the company into JPJamie. So I’ve done my part.
Now you’ve done yours. Thanks a lot.
Dear John: I think extending the age [for Social Security eligibility] will only serve to exacerbate unemployment.
The unemployment rate is already choking our young folks, and the more seniors who choose to remain in their positions, the more limited will be the opportunities for our children.
For the record, my well-qualified and ambitious son is 32 years old and has been out of work for nearly a year. JBS
Dear JBS:
Yes, extending the age for Social Security eligibility will make it more difficult for younger people to find work.
But not extending the age will cause the Social Security system to go bankrupt.
Neither is a good choice.
The ultimate answer, of course, is to get the economy growing so that new jobs can be created — and more people paying into Social Security.
Send your questions to Dear John, The NY Post, 1211 Ave. of the Americas, NY, NY 10036, or john.crudele@nypost.com.