Tundla Junction

In a move that took Wall Street by surprise, JPMC announced today their decision to publicly account for the billions of taxpayer dollars they received as part of a U.S. government bailout.

Like all other recipients of cash injections under the TARP program, JPMC had earlier declined to offer any details on what they had done with the money. Reversing that stance, JPMC issued a press release today to provide the break-up of the $25 billion in public money that the company received. An excerpt from the press release:

Your tax dollars at work: How JPMC used the $25 billion bailout

• $2.5 billion was spent to replace the corporate jets for JPMC top management. We got great deals on the airplanes that the Detroit 3 had to get rid of.
• $1.8 billion was invested in our future – we hired lobbyists to guarantee more bailout money in the coming months.
• $1.3 billion was spent on legal insurance to protect JPMC management and the board of directors from charges of fraud, misappropriation of funds and abandoning fiduciary responsibility.
• $1 billion was finders fee payable to Hank Paulson and his cronies like Neel Kashkari.
• $1.1 billion was used to shore up the 401(k) accounts of our senior management that were hammered this year.
• We were forced to use $4.5 billion to replenish funds that we lost having invested with Bernie Madoff.
• We made some smart (albeit a little risky) investments in US treasuries. That amounts to about $3.5 billion.
• We also used around $4 billion of our capital to buy a few smaller banks.
• $5 billion will be used to pay year-end bonuses and $2 billion will be kept as reserves for 2009 pay hikes.
• $15 million was used to make loans to consumers and $150 million was lent to businesses across America.

The total did not add up to $25 billion, which JPMC attributed to some creative accounting. “Normal-people math – like addition and subtraction – can never explain the financial information we provide. You need a degree in financial engineering and an aptitude for deception to reconcile the accounts of banks like ours,” said a JPMC spokesman. “For example, by the time people discover how we cooked our books, we’ll be dead. Harvard MBAs call it “the time value of money”,” he explained.

Other banks are outraged at this unconventional step that JPMC has taken towards accountability. “These kinds of disclosures are the number one threat to national security,” a Bank of America spokesperson said. “Bankers are the masters of the universe. So what if they asked for taxpayer money? Banks are not supposed to be answerable to anyone. JPMC’s actions are reprehensible.”

Citibank chairman William Rhodes was envious. “We still haven’t purchased legal insurance for our executive management even though they are at a higher risk of getting sued. We can’t afford it. The government should give us more money so that we can buy adequate cover to protect ourselves from the consequences of getting the money,” he pleaded.

Government officials have praised JPMC for their transparency. Elizabeth Warren, who chairs the bailout oversight committee set up by Congress, said “Congress was in such a rush to hand cash out, we forgot to include any accountability provisions in TARP. This voluntary disclosure certainly makes our job easier. I wish I had the authority to demand answers from all banks that took taxpayer money.”

Soon after JPMC’s announcement, treasury secretary Henry Paulson released a statement. “We will give all banks more money. Now we know that banks are able to lend out only 1% of the bailout funds they receive. This means we now have to increase our bailout efforts hundredfold if we truly want to ease the credit crisis,” he said in his statement.

Related links
Where did the bailout money go? - The Associated Press