JP Morgan Makes Millions Off the Poor With Processing Fees
JP Morgan is earning millions of dollars processing food stamps and other benefits for the poor because the states find it cheaper to outsource the service.
We’re not talking nickels and dimes. The Wall Street titan, the largest of the processors, receives a stipend for each transaction. There are 43 million people on the federal food stamp program.
In at least eight states, consumer inquiries and complaints are outsourced by JP Morgan to call centers in India.
This practice makes me cringe. It doesn’t pass the stink test. Why should Wall Street fatten its wealth at the expense of the poor?
I suppose the answer is welcome to the world is flat global economy. Politically, it is the answer to the conservatives’ prayer to limit the size and cost of government. After all, most states are near bankrupt and are trying anything to cut costs, even by administrative means. Cute. The taxpayer still pays the bill big time.
A detailed account of JP Morgan’s “public service” is detailed on The Economic Collapse Blog Saturday.
JP Morgan executive Christopher Paton admits that this is “a very important business to JP Morgan” and that it is doing very well. Considering the fact that the number of Americans on food stamps has exploded from 26 million in 2007 to 43 million today, one can only imagine how much JP Morgan’s profits in this area have soared. But doesn’t this give JP Morgan an incentive to keep the number of Americans enrolled in the food stamp program as high as possible?
…Paton says that 40% of food stamp recipients are currently working, and he seems convinced that there could be further “growth” in that segment.
That’s not all. JP Morgan also provides child support debit cards in 15 U.S. states and they also provide unemployment insurance benefit debit cards in seven states.
The federal and state governments have an unintended consequence of fattening the profit pools of Wall Street financial institutions. JP Morgan received $25 billion in bailout TARP funds in 2008 and in a few months, Jan. 9. 2009, paid back the “loan” amounting to a $1.75 billion return to the feds.
But there is no pay back in the credit card issuance service to the taxpayers other than higher profits for JP Morgan and its ilk.
The states are probably doing the right thing on a balance sheet but the morality of the practice I would question. I refer to another segment of the economy as to farming out administrative costs. In the health care field, Medicare operates on a 1% administrative cost while the private insurers require a 25%-to-30% margin, according to government and industry sources.
Call me a socialist liberal if you may because my mind has been infiltrated by big government since the FDR administration.
I still think the practice of earning millions off the poor for the enrichment of stockholders is creepy.