JP Morgan announced a 2.1 billion dollar profit for the first quarter, unlike it’s rival Goldman Sachs the banking giant did not mention any plans to repay the government money. According to Eric Dash’s report on washington post’s website. (www.washingtonpost.com)
JP Morgan has reportedly made nearly $6 billion dollars in the first quarter, $2.1 billion was categorized as profit, and $4.2 billion was set aside as a cushion, a CUSHION?! While millions of taxpayers are struggling to get by, the banking giant is cozily enjoy its “cushion”. Obviously, the CEO’s of the bank are a bit forgetful-they don’t remember that they need to repay the $25 billion taxpayers money that they got from the government.
Allegedly, when a survey of the nation’s 19 major banks comes out next month, the govenment might pump more money into the banking system! (www.nyt.com) One might wonder, how long can we keep feeding the bad bankers?
depending how the cushion is being used
RJD Thursday, April 16th at 10:49AM EDT (link)but it might not be a bad idea for any company to keep some extra cash on hand.
This is NOT their money for a "cushion" this is OUR money!...nt
JadedByPolitics Thursday, April 16th at 10:51AM EDT (link)..
Whoever has his enemy at his mercy &
does not destroy him is his own enemy
if they are turning a profit, isn't it their money?
RJD Thursday, April 16th at 10:57AM EDT (link)but even if it isn’t, if paying it back at this time means they will only be hurting in the long-run, it’s better to keep the cash now and build a stable foundation for the future.
I disagree RJD any "profit" belongs to WE The People UNTIL the loan is paid back!.
JadedByPolitics Thursday, April 16th at 12:35PM EDT (link)WE OWN THEM!!! They MUST pay the LARGEST creditor back FIRST…THAT IS US!
Whoever has his enemy at his mercy &
does not destroy him is his own enemy
In another time I would have been ok with this...
Aaron Gardner Thursday, April 16th at 11:04AM EDT (link)But with all things considered (Obama admin, contracts being de facto nullified, promises of more money) I don’t think having a cushion is the right way to go.
JP Morgan should pay back as much as possible while still preserving enough to continue having profitable quarters…if not we get into a situation of killing the goose before he has laid enough egss to repay his debt in full.
It is going to be a difficult thing to do, especially with evermore intervention by the FED and the Obama Admin…which may even be at odds with each other.
The whole thing is a mess and makes me want to agree with Jaded and say full stop….I am torn.
Aaron’s Archive
conform and celebrate diversity….or else!!!
Story on abc.com from tax day
RJD Thursday, April 16th at 11:23AM EDT (link)Goldman Sachs and Other Banks Feel the Heat to Pay Back Bailout Billions
Don’t know the author, but the article basically states my frame of mind concerning the issue.
I look at it this way:
1) the bailouts should not have happened.
2) but, how much damage would have been caused by letting the banks fail? how widespread? and what would it have meant?
3) the bailouts did happen. the money is out of the bag.
4) if companies can afford to pay it back, great.
5) if companies pay it back to gain a PR win, but can’t afford to, then it solves nothing and could only make matters worse.
6) companies that didn’t want federal monies but were forced to accept the bailouts, should return the money, if allowed.
Was it written out as a loan? (nt)
Neil Stevens Thursday, April 16th at 11:12AM EDT (link)Want to run for conservatives? Give.
There Is No Crisis
that's actually one of my questions, too.
RJD Thursday, April 16th at 11:29AM EDT (link)Another article, this one from BloggingStocks.com:
Paulson to launch TARP 4.0 to buy consumer-loan backed securities
Don’t know the website, but it has as a breakdown of the TARP phases. From what I can tell, it is a fund, not a loan.
I haven't looked at the report, but I assume
Brian Hibbert Thursday, April 16th at 11:35AM EDT (link)that “cushion” is loan loss reserves. In other words, that’s the amount of money regulators will require them to have on hand to cover bad loans.
Socialism doesn’t work. It looks nice on paper, but it’s been tried and it’s failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
Join the RedState Strike Force
Precisely.
Dan McLaughlin Thursday, April 16th at 12:59PM EDT (link)Also known as “the things we all criticized the financial institutions for not having enough of previously.”
I hear where this diary is coming from, but (1) we want the banks to get healthy and start turning profits again, (2) $2 billion is not actually that much money relative to the overall size of the bank, (3) as Neil notes, Uncle Sam isn’t necessarily treating all the bailout money as loans, and (4) just because a bank hasn’t publicly laid out an exit strategy from TARP-land does not mean they have none. In fact, while I have no personal knowledge of JPM’s plans, it would not be surprising if they are waiting to see what Goldman does and whether the government lets Goldman follow its plan before announcing one of JPM’s own.
“No compromise with the main purpose, no peace till victory, no pact with unrepentant wrong.” - Winston Churchill
Considering the looming possibility of executive pay restrictions...
bs Thursday, April 16th at 1:08PM EDT (link)I doubt that JPMC leadership is looking to keep TARP funds any longer than they have to.
Decorum is fo’ suckas
A few things to keep in mind
Francis Cianfrocca Thursday, April 16th at 1:24PM EDT (link)Back on October 13 when Paulson told the bank CEOs that they would be taking $25 billion each from TARP, Morgan CEO Jamie Dimon was the first guy in the room to jump up and scream that he didn’t need it and he didn’t want it.
Paulson’s response, history records, was analogous to Don Corleone saying “either your signature or your brains will be on this piece of paper.”
For that reason alone, I think the Treasury hasn’t much to say to Morgan or anyone else about the disposition of their rights under TARP. There’s a lot of other reasons, too.
The TARP money is intended as an addition to the *capital* positions of the assisted banks. Not their cash flows. Loans, even long-term loans, don’t count as high in the capital structure as preferred stock. (Citigroup’s position was so dire that the Treasury went as far as converting their TARP shares to common stock, which is an even higher form of capital.)
Since the Bear Stearns fiasco, Morgan has been the Treasury and the Fed’s close ally in their ad hoc crisis management. That was another thing Dimon didn’t want to do, and was forced to by the New York Fed. And guess what, they’ve lost all of the money they were forced to put up for Bear Stearns assets.
I notice you don’t object to the thing that Morgan started immediately doing last fall with their new capital: they started buying up distressed bank assets on the cheap. That was pretty dirty, if you ask me,
In terms of calling back the preferred shares, Morgan probably will do that someday. If memory serves, they carry a 5% coupon for three years, which then jumps to 9%. Since a large bank generally figures its cost of capital at something like 8 or 9 percent, the TARP deal is sweeeeeeeeet. After the dividend resets, they’ll either call the shares back or renegotiate the deal.
As far as the government throwing their weight around, in re exec comp and all the rest: The government is going to mess with Citi, and maybe with BAC, but not with Morgan.