The manner in which J. P. Morgan Chase lost more than $2 billion is particularly appalling. It’s even more insulting when one takes into account that risky foreign bets were made in lieu of investing in American companies.
For months, JPMorgan Chase has been one of the most difficult banks for small businesses seeking capital. My company, Biz2Credit, recently conducted an analysis of small business loan rejections. More often than not, JPMorgan Chase ranked #1 or #2 as the lender that most often denied requests for small business funding. At a time when big banks reject almost 9 of 10 funding requests, the banking behemoth was a leading naysayer.
Meanwhile, JP Morgan Chase took small business account deposits and bet big on risky investment products that led to huge losses. Embattled CEO, Jamie Dimon, says that “it could get worse” because of the company’s “errors, sloppiness, and bad judgment.”
I’ve experienced first hand the hypocrisy of how Chase treats small business owners. My company’s business credit card had an unlimited line of credit. Without cause, they capped it at $10,000 even though my personal and business credit rating is quite high.
Biz2Credit’s credit marketplace attracts up to 6,000 loan applications each month from small business owners, many of whom were rejected for loans and business lines of credit by Chase even though they had existing banking relationships with the firm.
Led by Dimon, JPMorgan Chase had built a stellar reputation for being great risk managers, but now the curtain has been drawn back, and the Wizard of Wall Street isn’t looking so great and powerful now. His firm took oversized bets with other people’s hard earned money and lost big time. Yet Chase frequently rejected small business funding and cut lines of credit because they were deemed “too risky.”
Does Chase really expect us to believe that derivatives and credit default swaps were considered a safer bet than American entrepreneurialism?
In its pursuit of continued big profits, Chase went to extremes to try to guard against risk. Anyone who understands how the markets work knows that this is not feasible over the long haul. You don’t take record profits without taking big risks and saying otherwise plays us all for fools.
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