What You Should Know About Bank One’s New Daddy


Chicago, Illinois

Now many Chicagoans have one more thing in common with people in Indonesia fighting to save their endangered rainforests, indigenous people in Equador threatening mass suicide to stop the building of a pipeline and your typical, Joe-Shmoe Iraqi.

When Bank One branches and ATMs began sprouting up on every major intersection in Chicago and right in my very own backyard, little did any of us know what lie ahead. Bank One has recently completed a merger with JP Morgan Chase (JPMC), and together they form the second largest bank in the history of capitalism, with $1.1 trillion in assets. The joint power they wield is facilitating the unbridled exploitation of both the environment and the economically impoverished wherever they and their borrowers operate — and they and their borrowers get around.

A national Day of Action took place yesterday in opposition to reckless “development” projects they have financed around the globe, and Chicago activists assembled during lunch hour at Bank One headquarters on Dearborn and Madison. Replete with their very own “Bank Crimes Unit” sporting hazmat suits, gloves and giant magnifying glasses, demonstrators entered the bank in pursuit of “Investments of Mass Destruction,” giving bank-goers, employees and passersby a lesson in the dangers of unrestricted corporate globalization, as well as a quirky tale to take back to the water-cooler.

Although the issues they dramatically interpreted take place in far away lands, the Loop-dwellers need not look far to witness Bank One’s questionable banking practices. For years, they have been financing payday lenders and pawn shops in lower-income and minority communities, while offering a disproportionate number of branches where residents can access financial services such as prime rate mortgages, small business loans and checking accounts.

The merger of these two banking giants could not have happened without the wave of banking deregulation that has taken place on both the state and federal level over the past decade. Today the size and influence of the JPMC – Bank One calls citizens to take a closer look at the giant living in the backyard, and to begin demanding from them equitable, sustainable and accountable business practices.
Shitting Where They Eat

The Woodstock Institute, an organization that has been promoting access to capital, credit and economic development in Chicago’s lower-income communities for the past 25 years, charged in a February 2005 report that low-income and minority communities have significantly less access to bank branches than their more affluent counterparts. This leaves them with a “service vacuum” that payday lenders have been scurrying to fill. “A borrower walks into a payday lender is offered a 45-day loan,” explains Marva Williams, VP of the Woodstock Institute. “At the end of the term, they have to pay back the entire principle or they roll over what they can’t pay.” According to the Institute’s analyses, a borrower can pay as much as $4,000 on a $200 loan in a one-year period, and the average payday loan in rolled over an average 13.8 times (in minority neighborhoods; predominantly white neighborhoods have a 37% lower roll-over rate). “These are people who are already strapped for cash and this becomes a short-term fix that in the long term gets them into serious trouble.” JPMC and Bank One have both financed such ventures. As long as “they are following all of the laws,” said a representative from the Bank One headquarters in Chicago, they do business with them. The development of the loopholes that allow such predatory practices have created a massive influx of payday lenders, and currently they operate 50% more outlets than McDonalds.

There are viable alternatives that attempt to bridge the gap for those living in underserved communities, and some of them are being attempted by local credit unions such as the Northside Community and the Southside Federal Credit Unions. These agencies are at the forefront of finance that aims to combat, rather than exploit, poverty. They offer low-interest, short-term loans and an alternative to payday lenders.

However, with JP Morgan Chase in the drivers seat, it is unlikely that this predatory trend, at least where JPMC – Bank One is concerned, will diminish. To the contrary, they have been repeatedly criticized by NY-based Fair Finance Watch for actually closing down branches in low- to moderate-income and minority communities in New York City, while simultaneously financing payday lenders right down the street. “Chase Manhattan Mortgage Corp…disproportionately excludes African Americans and particularly Latinos from its lending — and these disparities have grown worse through time,” reads their petition to deny JPMC’s proposal to acquire Bank One.
Environmental Record

Internationally, JP Morgan Chase has been involved some of the most controversial and environmentally destructive projects in recent history. They underwrote loans for China’s Three Gorges Dam project, which displaced over 1 million people, flooded over 24,000 hectares of farmland and damaged several ecosystems and communities along the way. In Indonesia, they finance BlueLinx Holdings, Inc., the largest wood distributor in the US, which admits to importing undocumented (likely illegal) lumber from Indonesia’s highly sensitive and quickly disappearing rainforests. They have also financed mines currently under investigation for poisoning local residents, as well as the worlds largest mine, responsible for displacing indigenous communities and, according to the Australian Council on Overseas Aid, the torture and extra judicial execution of local organizers in West Paupau. (For more information on these cases and others, visit www.dirtymoney.org.)

Here in the US, they are the major financer of oil and gas companies and in 2002 alone they ranked number one, representing over one-third of the entire market.
Iraq, Too?

Ever since Iraq was declared “open for business,” (and, no doubt, beforehand), insurance companies, construction firms, health managers and, yes, banks have been lining up to take a ride on the reconstruction merry-go-round, with JP Morgan Chase selling tickets. They scored a job with the Coalition Provisional Authority (CPA) running the Trade Bank of Iraq (TBI).

The TBI was established in 2003 to replace the UN Oil-for-Food Programme, moving control of revenue and import purchases from the state to the private sector. JP Morgan Chase is managing that transition, issuing letters of credit, guaranteed by Iraq’s crude oil supply, for the importation of billions of dollars in equipment and services. According to the JP Morgan Chase website, in the first two months after the birth of the TBI it issued import letters of credit for over $200 million in imports.

Although Iraqis need to import necessities from the outside world, the current “government of Iraq” is hardly an independent body with the best interests of the Iraqi people in mind. Companies from nations that supported and contributed to the war are first in line to enjoy the spoils, regardless of whether their products are economical or of high quality. The TBI itself will be comprised of banks from Coalition countries, all of whom will be positioned to facilitate investments from local moguls back home. Not that the parceling of the spoils will be entirely equitable. The US Export-Import bank is providing 100% insurance coverage for political and commercial risk to all US companies willing to invest, should Iraqi ministries default on payments.

However, what is most threatening to economic stability in Iraq is the CPA Order 39, opening up all of Iraq’s resources, save oil, to foreign ownership. Soon after the order was issued, Finance Minister Kamel Al-Gailani went a step further and declared that Iraq’s banks would be open to 100% foreign ownership. With this, it will be impossible for smaller, locally owned banks to have any oversight or participation in forging Iraq’s new “free market” economy, nor will they have rights to any of the profits.

This is more than a reconstruction plan. This exposes a long-term agenda of neocolonialism. Indeed, Bush and his cronies have publicly declared their vision for Iraq and, indeed, the Middle East. Current Ambassador John Negroponte was selected in a big part due to his experience as Ambassador to Mexico during the drafting of the North American Free Trade Agreement (NAFTA). George W has stated that he fully intends to create a “Middle East Free Trade Area” (MEFTA?) within 10 years.

Meanwhile, the Pentagon has assembled its own team of special advisers to brief on the speedy privitisation of Iraq’s nationalized industries.

Avoiding Paying the Piper

And all of this is what we know of. A 2001 report by Congress on money laundering, which involves disguising the origins of illegally obtained cash and then transforming it into apparently legitimate investments, named JP Morgan Chase as one of the four large banks in the US allowing these practices through “complacency, with lax due diligence, weak controls and inadequate responses to troubling information.”
The Price We Pay

But what can compete with convenience? Bank One is the most ubiquitous bank in Chicago, with over 1,000 ATMs in the metropolitan area.

And now, with the JP Morgan amalgamation, it has become a mega-merger with global reach, joining the cadre of bigger-than-life corporations that are increasingly all but consolidating entire industries. Only two companies in the world make all commercial jets. Three wholesalers control over 90% of the distribution of drugs. The four largest media giants effectively design the way Americans learn about global and national events. Critics of the mega-merger charge that this results in unions and grassroots community organizations losing bargaining power, as the mega-corporation can simply pick up and move it’s exploitative practices to another, more economically deprived locale if they are experiencing too much friction. At the same time, they charge, democracy itself is undermined, as elections and legislation become are increasingly and unduly influenced by industry and corporate lobbyists.

As more and more rivals join forces to take on bigger fish, unimaginable sharks are born. The little fish inevitably speaks with a funny accent, while the sharks are naturally great Whites, headquartered in Western Europe or North America. They limit competition and control prices, two indispensable components of any “free” market system, as envisioned by Adam Smith. JPMC – Bank One was just ten years ago seven separate entities, and now they are one behemoth bank.

Also precarious is the risk that a too-big-to-fail project will indeed disappoint, as happened during the recent Enron meltdown (which, incidentally, JP Morgan Chase was implicated in). Such a dive can, and usually does, have national economic consequences. Already, the consolidation of JPMC and Bank One has led to over 12,000 lay offs.
So what Are we Supposed to Do?

The Rainforest Action Network (RAN) has been spearheading a campaign for months, utilizing a variety of tactics. “We’re calling on JP Morgan Chase,” says Dan Firger, an organizer with the Rainforest Action Network, “to stop funding projects or operations that destroy endangered forests, to work to reduce the carbon emissions and climate change impacts resulting from investments in dirty energy sources like oil and coal, and to put safeguards in place to protect the human rights of indigenous peoples that may be affected by projects funded by the company” (details available at www.ran.org) .

Such agreements have been becoming increasingly common in recent years, as more and more corporations are recognizing that environmentally and socially responsible investing is simply good business sense. In fact, Citibank, the only mega-bank in the world bigger than JPMC, after facing very similar grassroots pressure (also spearheaded by RAN), released a groundbreaking set of comparable environmental commitments. Months later, Bank of America (the number three banking franchise in the US) followed suit and established even higher standards. They have realized that exploitative investments are not sustainable policy for human beings, the earth, or even bankers. Change is possible, at least environmentally.

However, ultimately, the political implications of the mega-merger are what have people rioting in the streets from Seattle to Cancun, Caracas to Seoul. The political clout and the resulting lack of government oversight of the mega-merger is the world’s greatest threat to labor and environmental standards as well as participatory democracy, and it is this that we need to protect, using every means still in our arsenal – whether it be through consumer action, letter writing, spending power or whatever other tactic you can imagine.

And there is always the option of taking to the streets. The activists who demonstrated yesterday outside of Bank One headquarters continued on to over 27 branches in Chicago and are no doubt already dreaming up their next undertaking.

JESSICA PUPOVAC can be reached at: PupovacJ@ChicagoCommons.org