JP Morgan Saves California Out of "Social Responsibility"? Yeah, OK
You have got to be kidding me. No one believes this, right?
Although JP Morgan won't say what interest rate it is charging California for its $1.5 billion loan it made to buy back California's IOUs, it seems likely that the rate is very low.
The IOUs had an interest rate of 3.75%, so the JP Morgan loan has to be lower than that.
More importantly, however, JP Morgan's head of municipal finance says that yield is irrelevant to the bank. It sees the loan as part of the bank's "social responsibility." What's more, JP Morgan plans to use the loan as a kind of loss leader to gain more municipal business.
When asked what motivated the move to "save" California from fiscal Armageddon, JP Morgan had this to say:
"Yield doesn’t have anything to do with it. We are trying to build up our municipal franchise. With a state the size of California, we have the capability to help on a big scale. People tend to remember you when you were there for them in tough times."
People also tend to remember a financial assraping, JPM. Just sayin.