CHICAGO -- Illinois Lieutenant Governor Pat Quinn and community leaders today urged the Federal Reserve Bank to give consumers a voice in the proposed $1.1 trillion merger of JP Morgan Chase and Chicago-based Bank One, the largest bank merger in American history.
In a letter to the Federal Reserve Bank of New York (which must approve the deal), Quinn said the decision is too important to rush into without extensive public input. He urged an extension of the public comment period past March 15 and called for public hearings to be held in Chicago and New York.
“Consumers will be affected mightily by this mega-deal and should be afforded every opportunity to weigh in,” Quinn said. “There are genuine concerns about access to credit, outsourcing of jobs overseas and whether the new banking behemoth created by this deal is truly in the public interest.”
In his letter, Quinn noted Federal Reserve regulations (12 CFR 262.3) allowing for hearings when written comments are insufficient. “There are facts in dispute about the proposed merger,” Quinn wrote. “The two banks should be required to give clear explanations on how they plan to ensure fair and equal access to credit, and maintain employment and ties to the communities they serve.”
Bank One - with Chicago roots dating back 140 years - is the sixth largest bank holding company in the nation, with 71,200 employees and $290 billion in assets. JP Morgan Chase - the nation’s third largest bank holding company - has 92,900 employees and $793 billion in assets. The deal would create the nation’s second largest bank.
“Bank One and its predecessor – First Chicago – have been a part of the Chicago financial landscape for a long time,” Quinn said. “We’re concerned about losing a good neighbor.”
“There are legitimate concerns about JP Morgan’s track record of extending credit. Let’s ensure that this merger results in greater access to credit for Illinois businesses and consumers, not less,” said Quinn, who served as Illinois State Treasurer from 1991-95. “The word ‘credit’ derives from the Latin word ‘to believe’. More public input is needed to determine if we can ‘believe’ the claims of these two banks about the benefits of the proposed merger.”
Quinn voiced concerns about the growing trend of big corporations “outsourcing” jobs to foreign low-wage countries.
According to the Wall Street Journal, JP Morgan has outsourced at least 1,200 jobs to Asia and has plans to outsource many more American jobs. JP Morgan has the world’s largest outsourcing contract for computer services, and was one of the first banks to outsource white-collar research jobs as well as call center and computer support jobs.
“Public hearings will enable us to ask these banks how many Illinois jobs they plan to outsource to foreign countries,” Quinn said. “Contrary to what Chairman Gregory Mankiw of the President’s Council of Economic Advisors recently said - that ‘outsourcing is just a new way of doing international trade’ - the job outsourcing trend by major corporations harms our economy and is a serious threat to American workers.”
Also to be addressed in a public forum is whether the proposed merger will serve the public interest. As financial institutions get more complex, regulation and scrutiny become more difficult. Even Federal Reserve Chairman Alan Greenspan has voiced concerns about the specter of failure by a trillion dollar global institution.
“Here in Illinois, we know what can happen when banks fail,” Quinn said, referring to the $4 billion taxpayer bailout of Continental Illinois National Bank in the 1980’s.
“They said the Titanic was unsinkable and Continental was ‘too big to fail’. Will American taxpayers be asked to bail this venture out sometime in the future? More dialogue is needed to address the unanswered questions about this mammoth banking deal,” Quinn said.
Quinn was joined by Chicago Ald. Anthony Beale (9th) and Ald. Manny Flores (1st).
Also urging a greater public voice were a wide range of community leaders and union officials from groups including AFL-CIO, Bethel New Life, Center for Neighborhood Technology, Chicago Coalition for the Homeless, Chicago Roseland Coalition, Chicago Community Renewal Society, Chicago Jobs Council, Chicago Community Ventures, Chicago Mutual Housing Network, Communications Workers of America, Greater Washington Park Community Development Corp, FaithCorp Fund, Illinois Community Action Association, Illinois PIRG, Jewish Council on Urban Affairs, Near Northwest Neighborhood Network, Neighborhood Housing Services, Protestants for the Common Good, South Austin Community Coalition, South Side Credit Union, Women Self-Employed and others.