April 12, 2019Gronda Morin

Bank CEO Dimon Schooled As To How An Employee Would Have To Budget At An Entry Pay Scale

At a recent House Committee hearing, it was a moment of pure joy to watch a Democratic Party freshman Rep. Katie Porter take the clueless JP Morgan CEO Jamie Dimon to task on how his front-line workers would have to budget on an entry pay scale of $16.00 per hour. Now just translate these budgeting challenges with someone who earns closer to the current minimum wage scale of $7.20 per hour.

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Katie Porter biography as per Ballotpedia:

Katie Porter (Democrat) is the representative from California’s 45th Congressional District in the U.S. House. Porter was elected to the office on November 6, 2018.

Porter defeated Republican Mimi Walters in the 2018 general election by a vote of 52.1 percent to 47.9 percent. Porter ran on progressive campaign themes including Medicare for all, affordable college, abortion access, and gun reform. To read about Porter’s stances on various issues, click here.

“Katie Porter was endorsed by progressive political action committee Democracy for America”

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“Porter’s work experience includes serving as a law professor for the University of California Irvine and other universities, serving as a consumer and bankruptcy attorney for the Consumer Financial Protection Bureau, the World Bank, the Federal Judicial Center, and the Uniform Law Commission, and clerking for Judge Richard S. Arnold of the Eighth Circuit Court of Appeals. She has also written three books and published research in a number of national law journals. Porter earned a bachelor’s degree from Yale University and a J.D. from Harvard Law School. She has three children”

At the beginning of the 116th Congress, Porter was assigned to the following committees:[Source]

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History..

After the 2008 Great Recession, the US government had to step in to regulate financial entities which were too big to fail . To avoid a repeat of all the devastation that occurred, the US Congress passed the 2010 Dodd-Frank Wall Street Reform Act to prevent banks from taking on too much risk.

Some major factors that led to the 2008 financial meltdown were the banks’ reckless high risk lending practices. For example,  Bank of America’s Countrywide Financial unit, caused Fannie Mae and Freddie Mac to lose market share and to respond by lowering their own standards. Then there were the mortgage guarantees. Many of the subprime (high risk) loans were bundled and sold, to the quasi-government agencies Fannie Mae and Freddie Mac. The implicit guarantee by the US federal government programs created a moral hazard and contributed to a glut of risky lending. The big banks making the high risk loans had no skin in the game. This was like a Ponzi scheme where it was only a matter of time when the accumulation and subsequent high default rates of these subprime mortgages led to the financial crisis and the consequent damage to the world economy.

See: Financial Crisis Inquiry Commission report – US Government 

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JP DIMON

Can you believe that the banking community is pushing the president’s administration to roll back these regulations that were enacted to prevent a repeat of this 2008 financial debacle? This is one reason why US Congress via its House oversight committees are conducting hearings. Having Rep. Katie Power who is well versed in financial institutional ‘ practices, doing the questioning, is a sight to behold.

Here’s the rest of the story…

On April 11, 2019, Caroline Kelly of CNN Politics penned the following report. “Freshman Democrat presses JPMorgan CEO Jamie Dimon over pay disparity”

Excerpts:

“Freshman Rep. Katie Porter stumped multimillionaire JPMorgan Chase CEO Jamie Dimon during a hearing Wednesday with a simple question: How are workers supposed to make ends meet?”

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PORTER/ DIMON
“The back-and-forth occurred during a House Financial Services Committee hearing featuring the CEOs of several major banks on Wednesday. Porter, a California Democrat, shared the story of a JPMorgan Chase employee — making a fraction of what the company’s top executives are paid — who is running a $567 deficit each month because her salary is insufficient to cover basic expenses.”
“How should she manage this budget shortfall while she’s working full-time at your bank?” Porter asked Dimon.”
“I don’t know that all your numbers are accurate, that number is generally a starter job –” he said.”
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“She is a starting employee, she has a 6-year-old child, this is her first job,” Porter said.
“You can get those jobs out of high school, and she may have my job one day,” Dimon replied.
“She may, but Mr. Dimon, she doesn’t have the ability right now to spend your $31 million,” Porter said, referring to Dimon’s 2018 pay package.
“I’m wholly sympathetic,” Dimon replied.
“She’s short $567, what would you suggest she do?” Porter pressed.
“I don’t know, I’d have to think about that,” he said.”
“Would you recommend that she take out a JP Morgan Case credit card and run a deficit?” Porter asked.”
A rendering of a recently opened Chase Bank location at 1401 NY Ave. NW, near McPherson Square in Washington. ((Courtesy of JPMorgan Chase)/(Courtesy of JPMorgan Chase))
Dimon repeated, “I don’t know, I’d have to think about it.”
“Would you recommend that she overdraft at your bank and be charged overdraft fees?” Porter asked.
“I don’t know I’d have to think about it,” Dimon said a third time, adding, “I’d love to call up and have a conversation about her financial affairs and see if we could be helpful.”
“(To) see if you could find a way for her to live on less than the minimum that I’ve described?” Porter asked.”
“Just (to) be helpful,” Dimon replied.”
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“Well, I appreciate your desire to be helpful, but what I’d like you to do is provide a way for families to make ends meet,” Porter said.
After the hearing, Porter tweeted a picture of a white board showing her calculations behind the numbers she referenced during the hearing.
“During my questioning, @jpmorgan CEO Jamie Dimon said he didn’t know if all my numbers were accurate,” she tweeted. “Here’s the math so he can check.”
During the hearing, Porter described a real job listing posted on the job-finding platform Monster.com for a JPMorgan Chase position in Irvine, Califonia, paying $16.50 an hour, saying, “now this bank teller, her name is Patricia. She has one child who’s 6 years old.”
When asked by CNN’s Brooke Baldwin whether the bank teller she described would want to communicate with Dimon, Porter replied, “Patricia is a representative of a number of constituents that we’d heard from.”
“So there’s no Patricia out there,” Porter said, adding, “but in the other way, there are thousands and thousands, and tens of thousands of Patricias out there.”
The California Democrat said that she checked apartment listings, the US Department of Agriculture’s food cost plan, and a cost of living calculator to estimate the expenses, adding, “I’m a single mom in Irvine, I know what it takes to make ends meet there.”
Porter added that her office has received feedback from her own district saying that the figures were “too conservative.”

7 comments

  1. Reblogged this on Scotties Toy Box and commented:
    Grand post on how hard it is for people today. Poverty is now institutionalized.

    U.S. Inflation Rate, $40,000 in 1990 to 2019
    According to the Bureau of Labor Statistics consumer price index, prices in 2019 are 94.49% higher than average prices throughout 1990. The dollar experienced an average inflation rate of 2.32% per year during this period.

    In other words, $40,000 in 1990 is equivalent in purchasing power to $77,797.09 in 2019, a difference of $37,797.09 over 29 years.

    Wages are not keeping pace. The minimum wage is not a living wage. Most of the people starting today have no way to get ahead. They can barely survive. They can not save nor spend for better educations to get a better job, and they have no time to get the education if they could afford it. The fact is people are buying less because they can not afford to buy more. A good economy is built on the selling of a product. If the population can not afford to buy anything , then the economy crashes. By putting more money in the hands of those who have less, who need more, then they will spend it as they need to and that stimulates the economy. In 1989 I bought a new home, a new truck, a used motorcycle and still had money for luxuries. Two years later I bought another new car and another motorcycle. There is no way a person starting out today could do that. Ron and I lived well for years on my one income. Today you need roommates just to afford a small apartment. This is not a sustainable situation.
    At the retirement end the situation is also dire. The people who had defined retirement plans are dying off. The people nearing retirement now for the most part have no retirement plans from their jobs and little to nothing saved. People my age needed everything they earned just to keep going. Social security doesn’t pay enough to live on at today’s prices. I know seniors who are making a choice between food, paying bills, or medications. I know of people rationing their medications because they can not afford to buy it. The rents and taxes these people pay are driving them from their homes forcing them to live with their adult children. The system is not working for the majority of americans.

    What is the poverty line income in the US?

    The Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. The 2010 figure for a family of 4 with no children under 18 years of age is $22,541, while the figure for a family of 4 with 2 children under 18 is $22,162.

    What is considered low income?
    The median family income in the area is $118,400. The HUD also now considers households of four earning $44,000 to be “extremely low income,” while households of four earning $73,300 are considered “very low income.” A one-person household is now considered to be low income if it earns $82,200.Jun 27, 2018

    January 2018 Median Household Income. Median household income in the U.S. rose to an estimated $59,055 in January 2018, an increase of nearly 0.4% from our December 2017 estimate of $58,829.Mar 1, 2018

    The annual earnings for a full-time minimum-wage worker is $15,080 at the current federal minimum wage of $7.25

    Think about this. The minimum wage is 7 grand below the poverty line in my example above.

    People can not survive on this income today. Low income is $118,400 and very low income is $73,300. Yet the average income in the US is only $59,055.

    Hugs

    Liked by 1 person

    • Dear Scottie,

      I love your thinking. I may use your comments in a future blog. I’ve been touting a similar song:

      (Sources: EPI, US Bureau of Labor and Statistics, Bloomberg)

      Since 1973 until 2018, the US corporate increase in productivity has been around 77% while the average Joe voter wages have been stagnate at about 12.4%.

      The major reason for the American workers’ stagnant wages has to do mostly with corporate greed but some causes have to do with more US goods being manufactured in other countries where the hourly pay for workers is much less; corporations developing a greater reliance in technology; and there being changes in the culture, like a greater usage by utility companies of renewable sources of energy versus fossil fuel.

      It used to be that after WWII until 1973, corporation executives shared the spoils of increased productivity, revenues, profits with their workers.

      As per the EPI Economic Policy Institute, “From WWII Until about 1973, when US corporations productivity numbers increased to about 95.65%, the average workers’ pay wages increased to about 91%. There was this consensus that as corporations increased its productivity, revenues, profits, the workers also participated in the division of the spoils.

      So these Americans are being squeezed financially to where most are not in a financial position to send their children to at least a public state college. Then their young folks are saddled too frequently with a mortgage type student loan as they start their careers. Finally, when the average American retires, fewer and fewer have enough to retire on as corporate pensions have gone the way of the Dodo bird. They are reliant on 401ks which do not provide the security of pensions.One of the presidents first acts in 2017 was to roll back an Obama created “Fiduciary rule” where financial advisers are required to act in clients’ best interests with their retirement savings/ investments.

      A Towers Watson study found that from 1978 to the end of 2013, only 24% of Fortune 500 companies offered any type of defined benefit plan.

      In short, the non stock owners (about 50%) of Americans have been systemically shut out of the American dream and they have every right to be furious as neither the Democratic Party or the Republican Party lawmakers have done much to give these folks even a glimmer of hope.

      As per a Bloomberg 11/8/2014 report, Since 1978, college tuition and fees have increased by a whopping 1,120%. During that same period, the price of food has increased 244% and medical expenses 601%. In fact, tuition prices have gone up four times faster than the consumer price index.

      The Democrats have to do a better job educating the American peoples.

      Hugs, Gronda

      Liked by 1 person

      • Hello Gronda. Well said, very well said. You may use anything I say or post. I think that the Democrats not understanding the harsh economic conditions today for a lot of the population has lead to the idea that both parties are the same, causing people to not voting as they see no hope for change. I hope this last two elections are a wake up call. It seems some Democrats got the message as the ones running for President seem to be putting forth policies that will help the lower incomes. Healthcare alone is a big help. Be well. Hugs

        Liked by 1 person

  2. It can be excruciatingly embarrassing to watch senior official display a lack of briefing going into an important meeting.
    Let us hope the young employer is not pilloried by lower management (acting or orders from above) ( or the urge by lower management to curry favour)

    Liked by 1 person

    • Dear Roger,

      You would think a CEO who makes…drum roll…only $31 million dollars a year could perform better when asked a simple question. He couldn’t bring himself to give the easy answer, “the solution to help that front-line worker would be to increase his wage rates like Bank of America has done.

      Hugs, Gronda

      Liked by 1 person

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