JP Morgan Chase and Co.

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JP Morgan Chase & Co. is one of the oldest financial services firms in the world. The company, headquartered in New York City, is one of the leaders in investment banking, financial services, asset and wealth management and private equity. With assets of $1.6 trillion, JPMorgan Chase is currently the third largest banking institution in the United States,[1] behind Bank of America and Citigroup. The hedge fund unit of JPMorgan Chase is the largest hedge fund in the United States with $34 billion in assets as of 2007.[2] Formed in 2000 when Chase Manhattan Corporation acquired J.P. Morgan & Co., the firm serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and governmental clients.


Record and Controversies

Historical controversies

Slave trade

JP Morgan Chase has faced a campaign of boycotts in the United States after refusing to settle a court claim relating to its involvement in the 19th-century slave trade. African American campaigners called on American students to boycott the bank's student loans business, which is worth $9 billion a year. JP Morgan Chase and its subsidiary, Bank One, are the country's biggest student loan providers. According to the Guardian:

JP Morgan Chase amassed enormous wealth off the backs of enslaved Africans. It owes us restitution, but refuses to pay. It has left us no choice,' Deadria Farmer-Paellman, the campaign's leader, said at a rally outside the firm's New York headquarters.
The slavery claim relates to Citizens' Bank and Canal Bank in Louisiana, both now part of JP Morgan Chase, which owned about 1,250 slaves and accepted approximately 13,000 more as collateral on loans to plantation owners between the 1830s and 1860s.[3]

South Africa

The company has been the subject of a lawsuit for providing financial assistance to the apartheid government of South Africa to expand its police and security apparatus, even after the United Nations had urged a boycott of the racist government in 1964 when it declared apartheid a crime against humanity. JP Morgan refuses to comment on the case, as it is still under investigation.[4]

Environmental concerns

Connection with illegal logging in Asia

A 2005 report by a group of US environmental groups named JP Morgan Chase and BlueLinx as major backers of illegal logging in Asia.[5][6] The claims came as Indonesia once again admitted it was unable to stop the trade.

The activist groups targeted BlueLinx bankers JP Morgan Chase as guilty of profiteering from illegal logging. The report said that the bank provided a loan of $165 million to bale the company out of debt trouble in 2004.[7]

Ilyse Hogue, director of the Global Finance Campaign at Rainforest Action Network, said, “JP Morgan Chase has built its financial empire by making investments of mass destruction like BlueLinx. JP Morgan Chase’s involvement in the illegal timber trade is not only a national scandal, but further proof that the company must put renewed effort into matching the environmental commitments of industry peers such as Citigroup and Bank of America.”[8]

Estimates suggest 70% of Indonesia’s original forest has been lost, and that an area the size of Switzerland is cut down every year with illegal logging believed to be responsible for the destruction of 10 million hectares (2.5 million acres).[9][10]

Iraq

JP Morgan Chase is leading a consortium which will make billions as Iraq's economy slowly recovers from the war. The group was selected to run the new Trade Bank of Iraq,[11][12] which has raised billions in trade guarantees by mortgaging future oil production and will make huge profits from the deals.

Although the Occupation Authority and JP Morgan Chase are making it possible for Iraq to trade with the world and buy essentials such as food and oil refining equipment despite its poor credit, critics point out that the situation is more complicated, especially since the government of Iraq is not an independent body, but rather an agent of occupation which doesn't necessarily have the best interests of the Iraqi people in mind.

Similar to the Iraqi reconstruction contracts that have favoured US companies with political ties, the export credits of the Trade Bank of Iraq favour companies from allied nations, regardless if the products are cheap or well-made.

It is the first time since the 1950s that foreign banks will have access to Iraq's financial system, whose main asset is the second largest oil reserves in the world.[13]

According to critics, the foreign ownership of Iraqi banks will make it practically impossible for locally owned banks to participate in the forging of a new economy.

There have been a number of conflicts of interests which have been highlighted. Firstly, JP Morgan Chase contributed $158,000 to the US Bush-Cheney administration before the war. And in an example of the revolving door phenomenon, former UK prime minister Tony Blair was appointed as a part-time senior adviser, on a salary expected to exceed $1m (£500,000) a year.[14]

Enron

The BBC reported that JP Morgan Chase was accused by the US financial watchdog, the Securities and Exchange Commission (SEC), of 'helping Enron cover up its financial weakness':

JP Morgan Chase "helped Enron mislead its investors by characterising what were essentially loan proceeds as cash from operating activities," the SEC said. SEC enforcement chief Stephen Cutler said firms violated federal laws if they knew "or had reason to know" that they were helping a company mislead its investors.[15]

People

Revolving Door

  • Former Treasury Chief Secretary MP from the Liberal Democrats, David Laws, who resigned from his position in 2010 over expenses claim, was a vice-president of J.P Morgan & Co from 1987 to 1994.[16][17]
  • John Bercow, Conservative MP for Buckingham, declared having provided 'communications training' to staff of Chase Manhattan Bank in 2002.[18]
  • Former U.K. Prime Minister Tony Blair was appointed a consultant and senior advisor to JP Morgan Chase & Co. in January 2008.[19]
  • Naomi Camper, a former tax and banking advisor to U.S. Senator Tim Johnson was appointed Co-Head of Federal Government Relations at JP Morgan Chase & Co in 2005.[20]
  • William M. Daley, head of the U.S. Department of Commerce from 1997 to 2000, has been Chairman of Midwest Region of J.P. Morgan Chase & Co. since May 2004 and serves on its Executive Committee and its International Advisory Council.[21]
  • U.K. Life Peer Michael Forsyth, Lord Forsyth of Drumlean, a former Secretary of State for Scotland, was Vice-Chairman of Investment Banking Europe for JP Morgan from 1999 to 2001 and Deputy Chairman of JP Morgan UK from 2002 to 2005.[22]
  • U.K. Life Peer Richard Howe, Lord Howe of Aberavon was a member of J. P. Morgan’s International Advisory Council from 1992 to 2001.[23]
  • William Langford, Senior Vice President at J.P. Morgan Chase New York, is a former associate director at the U.S. Treasury’s Financial Crimes Enforcement Network.[24]
  • Enrico Anthony Lazio, Executive Vice-President of Global Government Relations at J.P. Morgan Chase, was a Member of the U.S. House of Representatives from 1993 to 2001.[25]
  • Peter Lilley, Conservative MP for Hitchin and Harpenden and former Secretary of State for Trade and Industry is a Director of JP Morgan Fleming Claverhouse Investment Trust PLC.[26]
  • Minoru Makihara, a member of the International Council of JPMorgan Chase & Co. since June 2004, is a Member of the Senior Advisory Group to the Minister of Finance of Japan.[27]
  • U.K. Life Peer Robin Renwick, Lord Renwick of Clifton, a former diplomat, has been Vice-Chairman of Investment Banking JP Morgan Europe since 2001 and JP Morgan Cazenove since 2005.[28][29]
  • Stephen Ruhlen, co-head of Federal Government Relations, was Deputy Assistant at the U.S. Vice President’s Office from 2001 to 2003.[30]

Contact

Website:
http://www.jpmorganchase.com
Revolving Door.jpg This article is part of the Revolving Door project of Spinwatch.




Resources

Notes

  1. ↑ Federal Reserve System, Top 50 bank holding companies, 31 March 2007, accessed 02 August 2007.
  2. ↑ Barr, Alistair, "J.P. Morgan is largest U.S. hedge-fund firm," 05 March 2007, MarketWatch, accessed 02 August 2007.
  3. ↑ Walsh, Conal, "JP Morgan faces boycott over slave trade reparations," 11 December 2005, The Observer, accessed 17 May 2010.
  4. ↑ Jeserich, Mitch, "Banking on Empire," 04 February 2004, CorpWatch, accessed 25 February 2008.
  5. ↑ AScribe, "JP Morgan Chase and BlueLinx Linked to Illegal Logging of Endangered Forests and Resulting Humanitarian Crisis," 24 February 2005, Press Conference, accessed 31 January 2011.
  6. ↑ Rainforest Portal, "Report into illegal logging attacks JP Morgan," 01 March 2005, Ethical Corporation, accessed 18 May 2010.
  7. ↑ Rainforest Portal, "Report into illegal logging attacks JP Morgan," 01 March 2005, Ethical Corporation, accessed 18 May 2010.
  8. ↑ Rainforest Portal, "Report into illegal logging attacks JP Morgan," 01 March 2005, Ethical Corporation, accessed 18 May 2010.
  9. ↑ Ethical Corporation, "Report into illegal logging attacks JP Morgan," accessed 25 February 2008.
  10. ↑ Rainforest Portal, "Report into illegal logging attacks JP Morgan," 01 March 2005, Ethical Corporation, accessed 18 May 2010.
  11. ↑ Haddadin, Haitham, "Iraq: Trade Bank of Iraq Gets $2.4 bln Export Guarantees," 24 January 2004, Reuters, accessed 17 May 2010.
  12. ↑ CPA, Creating a sound and modern banking system, 12 November 2007 Web Archive, accessed 31 January 2011.
  13. ↑ Jeserich, Mitch, "Banking on Empire," 04 February 2004, CorpWatch, accessed 25 February 2008.
  14. ↑ Wearden, Graeme, "Blair joins JP Morgan as $1m-a-year adviser," 10 January 2008, The Guardian, accessed 17 May 2010.
  15. ↑ BBC, "US banks fined over Enron," 29 July, 2003, accessed 04 March 2008.
  16. ↑ Debrett's, The Rt Hon David Laws, MP, accessed 31 January 2011.
  17. ↑ Hennessy, Patrick, Melissa Kite and Patrick Sawer, "David Laws resigns over expenses claim," 29 May 2010, Telegraph, accessed 31 January 2011.
  18. ↑ UK Parliament, Register of Members' Financial Interests, accessed 31 January 2011.
  19. ↑ J.P.Morgan, "Tony Blair appointed senior advisor to JPMorgan Chase," 10 January 2008, accessed 31 January 2011.
  20. ↑ Sarasohn, Judy, "Jericho Fights the Battle of Stem Cells," 09 June 2005, Washington Post, accessed 31 January 2011.
  21. ↑ Forbes, William M. Daley, accessed 31 January 2011.
  22. ↑ Who's Who 2009, FORSYTH OF DRUMLEAN, online edition, Oxford University Press, accessed 24 March 2009.
  23. ↑ Who's Who 2009, HOWE OF ABERAVON, online edition, Oxford University Press, accessed 24 March 2009.
  24. ↑ FinCEN, "William D. Langford, Jr. Departing the Financial Crimes Enforcement Network," 22 March 2006, Press Release, accessed 31 January 2011.
  25. ↑ OpenSecrets, Lazio, Rick A, accessed 31 January 2011.
  26. ↑ UK Parliament, Register of Members' Interests, accessed 31 January 2011.
  27. ↑ Bloomberg Businessweek, Minoru Makihara, accessed 31 January 2011.
  28. ↑ UK Parliament, Register of Lords' Financial Interests, as at 06 December 2010, accessed 31 January 2011.
  29. ↑ Debrett's, The Rt Hon Lord Renwick of Clifton, KCMG, accessed 31 January 2011.
  30. ↑ OpenSecrets, Ruhlen, Stephen S, accessed 31 January 2011.
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