It doesn’t get any more Orwellian than
this: Wall Street mega banks crash the U.S. financial system in 2008.
Hundreds of thousands of financial industry workers lose their jobs. Then,
beginning late last year, a rash of suspicious deaths start to occur among
current and former bank employees. Next we learn that four of the Wall Street
mega banks likely hold over $680 billion face amount of life insurance on their
workers, payable to the banks, not the families. We ask their
Federal regulator for the details of this life insurance under a Freedom of
Information Act request and we’re told the information constitutes “trade
secrets.”
According to the Centers for Disease Control and Prevention, the life expectancy of
a 25 year old male with a Bachelor’s degree or higher as of 2006 was 81
years of age. But in the past five months, five highly educated JPMorgan male
employees in their 30s and one former employee aged 28, have died under
suspicious circumstances, including three of whom allegedly leaped off buildings
– a statistical rarity even during the height of the financial crisis in
2008.
There is one other major obstacle to brushing
away these deaths as random occurrences – they are not happening at JPMorgan’s
closest peer bank – Citigroup. Both JPMorgan and Citigroup are global
financial institutions with both commercial banking and investment banking
operations. Their employee counts are similar – 260,000 employees for JPMorgan
versus 251,000 for Citigroup.
Both JPMorgan and Citigroup also own massive amounts of bank-owned
life insurance (BOLI), a controversial practice that pays the corporation when a
current or former employee dies. (In the case of former employees, the banks
conduct regular “death sweeps” of public records using former employees’ Social
Security numbers to learn if a former employee has died and then submits a
request for payment of the death benefit to the insurance company.)
Wall Street On Parade carefully researched public death
announcements over the past 12 months which named the decedent as a current or
former employee of Citigroup or its commercial banking unit, Citibank. We found
no data suggesting Citigroup was experiencing the same rash of deaths of young
men in their 30s as JPMorgan Chase. Nor did we discover any press reports of
leaps from buildings among Citigroup’s workers.
Given the above set of facts, on March 21 of this year, we wrote to
the regulator of national banks, the Office of the Comptroller of the Currency
(OCC), seeking the following information under the Freedom of Information Act
(See OCC Response to Wall Street On Parade’s Request for Banker Death
Information):
The number of deaths from 2008 through
March 21, 2014 on which JPMorgan Chase collected death benefits; the total face
amount of BOLI life insurance in force at JPMorgan; the total number of former
and current employees of JPMorgan Chase who are insured under these policies;
any peer studies showing the same data comparing JPMorgan Chase with Bank of
America, Wells Fargo and Citigroup.
The OCC responded politely by letter dated April 18, after first
calling a few days earlier to inform us that we would be getting nothing under
the sunshine law request. (On Wall Street, sunshine routinely means dark
curtain.) The OCC letter advised that documents relevant to our request were
being withheld on the basis that they are “privileged or contains trade secrets,
or commercial or financial information, furnished in confidence, that relates to
the business, personal, or financial affairs of any person,” or relate to “a
record contained in or related to an examination.”
The ironic reality is that the documents do not
pertain to the personal financial affairs of individuals who have a privacy
right. Individuals are not going to receive the proceeds of this life insurance
for the most part. In many cases, they do not even know that multi-million
dollar policies that pay upon their death have been taken out by their employer
or former employer. Equally important, JPMorgan is a publicly traded company
whose shareholders have a right under securities laws to understand the quality
of its earnings – are those earnings coming from traditional banking and
investment banking operations or is this ghoulish practice of profiting from the
death of workers now a major contributor to profits on Wall Street?
As it turns out, one aspect of the information cavalierly denied to
us by the OCC is publicly available to those willing to hunt for it. On March 24
of this year, we reported that JPMorgan Chase held $10.4 billion in BOLI assets
at its insured depository bank as of December 31, 2013.
We reached out to BOLI expert, Michael D. Myers, to understand what
JPMorgan’s $10.4 billion in BOLI assets at its commercial bank might represent
in terms of face amount of life insurance on its workers. Myers said: “Without
knowing the length of the investment or its rate of return, it is difficult to
estimate the face amount of the insurance coverage. However, a cash value of
$10.4 billion could easily translate into more than $100 billion in actual
insurance coverage and possibly two or three times that amount” said Myers, a
partner in the Houston, Texas law firm McClanahan Myers Espey, L.L.P.
Myers’ and his firm have represented the families of deceased
employees for almost two decades in cases involving corporate-owned life
insurance against employers such as Wal-Mart Stores, Inc., Fina Oil and Chemical
Co., and American Greetings Corp. (Families may be entitled to the proceeds of
these policies if employee consent was required under State law and was never
given and/or if the corporation cannot show it had an “insurable interest” in
the employee — a tough test to meet if it’s a non key employee or if the
employee has left the firm.)
As it turns out, the $10.4 billion significantly
understates the amount of money JPMorgan has tied up in seeking to profit from
workers’ deaths. Since Wall Street banks are structured as holding
companies, we decided to see what type of financial information might be
available at the Federal Financial Institutions Examination Council (FFIEC), a
federal interagency that promotes uniform reporting standards among banking
regulators.
The FFIEC’s web site provided access to the consolidated financial statements of the bank holding companies
of not just JPMorgan Chase but all of the largest Wall Street banks. We
conducted our own peer review study with the information that was available.
Four of Wall Street’s largest banks hold a total of $68.1 billion
in BOLI assets. Using Michael Myers’ approximate 10 to 1 ratio, that would mean
that over time, just these four banks could potentially collect upwards of $681
billion in tax free income from life insurance proceeds on their current and
former workers. (Death benefits are received tax free as is the buildup in cash
value in the policies.) The breakdown in BOLI assets is as follows as of
December 31, 2013:
Bank of America $22.7 billion
Wells Fargo 18.7 billion
JPMorgan Chase 17.9 billion
Citigroup 8.8 billion
In addition to specifics on the BOLI assets, the consolidated
financial statements also showed what each bank was reporting as “Earnings
on/increase in value of cash surrender value of life insurance” as of December
31, 2013. Those amounts are as follows:
Bank of America $625 million
Wells Fargo 566 million
JPMorgan Chase 686 million
Citigroup 0
Given the size of these numbers, there is another aspect to BOLI
that should raise alarm bells among both regulators and shareholders. The Wall
Street banks are using a process called “separate accounts” for large amounts of
their BOLI assets with reports of some funds never actually leaving the bank
and/or being invested in hedge funds, suggesting lessons from the past have not
been learned.
On May 20, 2008, Bloomberg News reported that Wachovia Corp. (now
owned by Wells Fargo) and Fifth Third Bancorp reported major losses on failed
gambles with BOLI assets. “Wachovia reported a $315 million first-quarter loss
in its bank-owned life insurance program, known as BOLI, because of investments
in hedge funds managed by Citigroup Inc. Fifth Third said in a lawsuit filed
last month that it had losses of $323 million from Citigroup’s Falcon funds,
which slumped more than 50 percent in the past year as the subprime market
collapsed.” Citigroup’s Falcon Strategies hedge fund had lost as much as 75
percent of its value by May 2008.
Following are the names and circumstances of the five young men in
their 30s employed by JPMorgan who experienced sudden deaths since December
along with the one former employee.
Joseph M. Ambrosio, age 34, of
Sayreville, New Jersey, passed away on December 7,
2013 at Raritan Bay Medical Center, Perth Amboy, New Jersey. He was
employed as a Financial Analyst for J.P. Morgan Chase in Menlo Park. On March
18, 2014, Wall Street On Parade learned from an immediate member of the family
that Joseph M. Ambrosio died suddenly from Acute Respiratory Syndrome.
Jason Alan Salais, 34 years old, died December 15,
2013 outside a Walgreens inPearland, Texas.
A family member confirmed that the cause of death was a heart attack. According
to the LinkedIn profile for Salais, he was engaged in Client Technology Service
“L3 Operate Support” and previously “FXO Operate L2 Support” at JPMorgan. Prior
to joining JPMorgan in 2008, Salais had worked as a Client Software Technician
at SunGard and a UNIX Systems Analyst at Logix Communications.
Gabriel Magee, 39, died on the evening of
January 27, 2014 or the morning of January 28, 2014. Magee was discovered at approximately 8:02 a.m. lying on a
9th level rooftop at the Canary Wharf European headquarters
of JPMorgan Chase at 25 Bank Street, London. His specific area of specialty at JPMorgan was “Technical
architecture oversight for planning, development, and operation of systems for
fixed income securities and interest rate derivatives.” A coroner’s inquest to
determine the cause of death is scheduled for May 20, 2014 in London.
Ryan Crane, age 37, died February 3, 2014, at his home in
Stamford, Connecticut. The Chief Medical Examiner’s office is still in the
process of determining a cause of death. Crane was an Executive Director
involved in trading at JPMorgan’s New York office. Crane’s death on February 3
was not reported by any major media until February 13, ten days later, when
Bloomberg News ran a brief story.
Dennis Li (Junjie), 33 years old, died February
18, 2014 as a result of a purported fall
from the 30-story Chater House office building in Hong Kong where JPMorgan
occupied the upper floors. Li is reported to have been an accounting major who
worked in the finance department of the bank.
Kenneth Bellando, age 28, was found
outside his East Side Manhattan apartment building on March
12, 2014. The building from which Bellando allegedly jumped was only
six stories – by no means ensuring that death would result. The young Bellando
had previously worked for JPMorgan Chase as an analyst and was the brother of
JPMorgan employee John Bellando, who was referenced in the Senate Permanent
Subcommittee on Investigations’ report on how JPMorgan had hid losses and lied
to regulators in the London Whale derivatives trading debacle that resulted in
losses of at least $6.2 billion.
No comments:
Post a Comment