25 July 2023
In the wake of JPMorgan Chase’s controversial expansion into Israel and Singapore, concerns have been amplified due to the bank’s troubling history of admitting to five criminal felony counts since 2014. The extension could add billions to its already problematic uninsured deposits, raising significant concerns for regulatory bodies. As of year-end 2022, JPMorgan held a staggering $1.48 trillion in uninsured deposits, equating to 60% of its total deposits, which are not insured by the Federal Deposit Insurance Corporation (FDIC).
The recent large-scale bank failures in the US have underscored the risk of such massive uninsured deposits, leading the FDIC to propose a special levy of 0.125 percent on uninsured deposits above $5 billion, payable over eight quarters. If enacted, this measure would deal a severe financial blow to JPMorgan Chase and other banks holding large amounts of uninsured deposits.
However, this proposal has met with fierce resistance from large banks. Their lobbying organization, the Bank Policy Institute (BPI), has demanded evidence that the largest banks were the primary beneficiaries of the federal regulators’ systemic risk assessments, and it has objected to the proposal’s potential for future reapplication.
In response to the banks’ objections, Dennis Kelleher, President and CEO of Better Markets, a nonprofit watchdog, emphasized that the main purpose of the FDIC deposit insurance is to protect bank depositors, not the banks. Kelleher further suggested that large banks, which have sufficient funds for stock buybacks, should pay the special assessment within one year rather than over eight quarters.