Sunday, February 13, 2011

The Lawbreaking JPMorgan Chase

JPMorgan Chase

January 17th, JPMorgan Chase breathlessly announced, "JPMORGAN CHASE REPORTS FOURTH-QUARTER 2010 NET INCOME OF $4.8 BILLION, UP 47% OVER PRIOR YEAR, ON REVENUE OF $26.7 BILLION; $1.12 EARNINGS PER SHARE. FULL-YEAR 2010 NET INCOME OF $17.4 BILLION, UP 48% OVER PRIOR YEAR, ON REVENUE OF $104.8 BILLION; $3.96 EARNINGS PER SHARE." They make a lot of money and, as the House Veterans Affairs Committee learned last Wednesday, they break a lot of laws.

Calling borrowers (whose loans you have assumed, JPMorgan Chase did not originally make the loans themselves) at three and four in the morning is against the law. As the Chair of the House Veterans Affairs Committee Jeff Miller noted in his opening remarks, they also broke the Servicemembers Civil Relief Act which has been around "in various forms since the war of 1812." They did so by harassing active duty service members and their families and by overcharing them.

And if you couldn't make those overcharged payments? They foreclosed. Foreclosure took place on at least eighteen homes.

But, JPMorgan Chase, in the form of Stephanie Mudick, wanted to insist the foreclosure wasn't really like foreclosure because JPMorgan Chase didn't sell the homes to an outside buyer, JPMorgan Chase just took over the ownership of the homes and kicked the veterans and veterans families over.

Oh, the family lost their home but a Century 21 sign didn't go up in the front yard so it's no harm, no foul?

Julia and Captain Jonathan Rowles offered testimony about their five year battle with JPMorgan Chase where they were repeatedly harassed with phone calls, repeatedly threatened, repeatedly forced to prove that he was active duty (forced to prove that every 90 days), overcharged and received no help at all. At one point, the family traveled from South Carolina to Colorado just because one JPMorgan Chase employee said he could fix the whole thing. They arrived there, on their own dime, spent a few days speaking to the man and he couldn't help them. Nor could any of the 'experts' they were told to phone or that phoned them.

US House Rep. Timothy Walz was curious about these tele-'experts' and wondered what the chance was that a number of the Rowles' phone calls were 'addressed' by employees at a JPMorgan Chase call center in the Philippines. As with so many questions put to her, Mudick couldn't provide a "yes" or a "no" but she did admit that was a possiblity. If that took place, Mudick explained, it would have been the Rowles' fault because the customer should always make sure they are speaking to an expert on the phone.

JPMorgan Chase is the one paying and allegedly training their phone staff. Seems like that responsibility would fall on the ones answering the phones, not the customers. And we fail to see how this reconciles with the corporation's claim, "At JPMorgan Chase, corporate responsibility is about what we do every day in our businesses and how we do it."

Next go round, maybe JPMorgan Chase will blame their overcharging on the customers as well?

In her opening statements, Mudick told the Committee that JPMorgan Chase had identifed $1.8 million in overcharges the corporation had made, $1.8 million they overcharged military families. That's their audit, who knows what numbers an outside audit would produce.

But, Mudick wanted the Committee, the Rowles and the press to know, not to worry because they were going to repay the overpayments and they would even tack on 7.5% interest.

US House Rep. Michael Michaud wasn't impressed with that meager amount, "You heard the Rowles went through a lot. And you mentioned errors. And originally when I heard about it, I figured, yeah, it was for people to make errors but what the Rowles went through -- five years of harassing phone calls, three or four o'clock in the morning is just beyond errors. And you heard some of my colleagues talk about arrogance, greed within JPMorgan and, actually, Mr. [US House Rep Cliff] Stearns mentioned the fact that JPMorgan received -- I know they paid it back -- $25 billion of the TARP funding [US government bail out of the bank industry at the end of 2008]. Mr. Diamond, the CEO for JPMorgan, received a bonus in 2007 of $28 million. Last year, almost $16 million bonus. And you're paying these individuals seven-and-a-half percent interest? I think there is a disconnect when you look at the bonuses received to the CEOs and what you have done to individuals who have served this country very well. I'm sure that the CEO for JPMorgan has a very nice home he probably can cater Christmas parties, Thanksgiving parties at his very elegant home and he can probably sleep very well at night."

Stephanie Mudick felt that 7.5% was ample (that averaged out to a $70 payment for each overcharged customer) because "[. . .] most of the, uh, service members who were impacted by this, uh, are-are not even aware that they overpaid. And in part, that's because the amount they overpaid was not-not material to them." You swipe money from most people's pockets, its "material to them." Whether its five dollars, fifty dollars or five hundred dollars. And you swipe money from someone's pocket? That's theft. And it's against the law which makes JPMorgan Chase's behavior very "material."

The Committee appeared largely unimpressed with the statements from JPMorgan Chase's Vice President of Customer Service (Mudick). They were even less impressed when US House Rep. and Ranking Member Bob Filner attempted to determine Mudick's role at JPMorgan Chase and the power she had or did not have to fix anything.

Ranking Member Bob Filner: Uhm, how many executive vice presidents are there at Chase? Or, let me put it another way, how high are you up in the heirarchy there?

Stephanie Mudick: Uh, I am a member of Chase's Executive Committee which is fewer than a hundred employees at Chase -- at JPMorgan Chase.

Ranking Member Bob Filner: And what does the 100 people do? I mean, that's the highest policy making thing in Chase?

Stephanie Mudick: Uh, there is an Operating Committee which is a group of approximately 20 people.

Ranking Member Bob Filner: How many executive vice presidents are there?

Stephanie Mudick: I don't have the answer to that question, sir, I'm sorry.

Ranking Member Bob Filner: But you'll find out for me, right?

Stephanie Mudick: I will indeed.

Ranking Member Bob Filner: Could you fix things if we need to ask? I mean, you're here on behalf of Chase so I assume that means you can fix things. Can you fix things? I mean, you said you weren't aware of that hotline number [a JPMorgan Chase number to deal with SCRA problems which Julia Rowles testified was just an answering machine passed off as a hotline and one that has now been disconnected for months]. Can you find it out right away? Can you call someone and say, "What's going on there?"

Stephanie Mudick: Uh, together with-with my colleagues -- There is -- I would say --

Ranking Member Bob Filner: Okay, so you can't fix things.

Stephanie Mudick (Con't): -- there are many -- Excuse me, sir. I would say that we try and fix whatever --

Ranking Member Bob Filner: Okay, the Rowles testified that they didn't have any statements for a year, you hadn't cashed their last mortgage check. Can you fix that today?

Stephanie Mudick: Uh --

Raking Member Bob Filner: You said you were going to make them whole. They've brought up several questions. Can you fix that?

Stephanie Mudick: We are trying to fix --

Ranking Member Bob Filner: I don't want a "we." You? Can you fix that?

Stephanie Mudick: I can, together with my colleagues causes changes to be made in our organization. Uh -- and with respect to the Rowleses -- Uh, uhm, you know,,we are trying to figure out how we can come to an agreement --

Ranking Member Bob Filner: Come to an agreement because of a lawsuit. But you said you were going to make them whole. As I read your statement, your average payment to make people whole was seventy dollars. Does that make people whole who've gone through this stuff?

Stephanie Mudick: The-the median payment is $70 and-and let me explain to you how-how we get to that number.

Ranking Member Bob Filner: Because you're just dealing with the amount of interest you overpaid plus some fees, that's all you're dealing with. You're not dealing with any human costs or any emotional costs or any pain and suffering as they would say. You're just dealing with the amount of interest and fees that you overcharged. Right? I mean that's what it says here [holds up Mudick's prepared statement] anyway.

Stephanie Mudick: Congressman, most of the, uh, service members who were impacted by this, uh, are-are not even aware that they overpaid. And in part that's because the amount they overpaid was not-not material to them.

Ranking Member Bob Filner: I can't believe that there's nobody else going through what the Rowles did. But, you know, I mean, you can't make the changes, you're not making them whole. Why should -- You broke the law. Your bank broke the law. Shouldn't someone go to jail for that?
Stephanie Mudick: Uh --

Ranking Member Bob Filner: And who should? Who should? Who's responsible? Are you as the executive v.p. who was given us by the bank to answer for this? Should you go to jail?

Stephanie Mudick: Uh, we are doing a review internally in order to --

Ranking Member Bob Filner: I want to know --

Stephanie Mudick: -- figure out --

Ranking Member Bob Filner: -- who's responsible?

Stephanie Mudick: -- who's responsible for what happened.

Ranking Member Bob Filner: Are you going to tell us who? Are you going to give us a person? Or people? That are responsible?

Stephanie Mudick: Well we will certainly hold those folks who are resposible for this accountable.

Ranking Member Bob Filner: I want to know about you. You broke the law. How are we going to hold you accountable? Are we going to know who did what when?

And those important questions found no answers at last week's hearing. They still linger in the air. Will JPMorgan Chase get away with breaking the law? Will their measely seventy dollar mediam payments qualify as 'compensation' to the families who suffered? And what's to prevent it from happening again? The Rowles' attorneys proposed upgrading breaking the the Servicemembers Civil Relief Act to a felony and that might be one way of ensuring that it's not 'accidentally' and repeatedly broken again. Another thing could be a week of Congressional hearings on this issue.

C.I., Ava, Wally and Kat attended the hearing last week and we utilized C.I.'s notes, their memories and the reporting the four had already done last week. You can read their reporting in the following:

"Iraq snapshot"
"The crooks get away with it (Ava)"
"JP Morgan Chase's song and dance"
"Grading the new Chair of the House Veterans Affairs Committee"
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