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Tue October 15, 2013
JPMorgan To Front Customers If Federal Shutdown Drags On
Originally published on Tue October 15, 2013 2:50 am
JPMorgan Chase says it will cover Social Security and Welfare payments for its customers if the government goes into default or the shutdown continues.
If nothing else, it's good public relations for a company which hasn't had much lately.
The bank spent nearly 40 percent of the company's revenue over the last quarter — more than $9 billion — on legal expenses. Money paid to fight government investigations and on fines.
The Wall Street Journal reports JPMorgan's CEO Jamie Dimon is pledging to let customers draw on their accounts for free to cover Social Security and Welfare payments if the government is unable to send them starting later this month.
"It's a very smart idea by a bank that's being punished in the press," says consumer advocate Ed Mierzwinski of U.S. Public Interest Research Group.
JPMorgan would almost certainly get its money back once Congress comes to an agreement.
Even if there's no agreement, Alex Pollock of the American Enterprise Institute says it's unlikely the government would stop paying Social Security and Welfare. But he says it's reassuring for people who need that money.
"I guess it won't be necessary but you know whenever people are worried about contingencies, to have some kind of hedge or insurance is good," he says.
If it comes to it, JPMorgan Chase would temporarily lay out between $6 billion and $8 billion. Plus it would gain some good will.