Jamie Dimon, CEO of JPMorgan Chase & Co., gestures during an interview with Bloomberg Television at the JPMorgan Global Markets conference in Paris, France on Thursday March 14, 2019.
Christopher Morin | Bloomberg | Getty Images
JPMorgan Chase has a number of policy recommendations on how President-elect Joe Biden can prevent a coming wave of economic misery and reduce inequality in a post-Covid world, CNBC has learned.
The first priority is for lawmakers to agree on another round of pandemic aid payments to lower-income households and expand benefits for the unemployed, the paper says. Failure to do so will cause unnecessary suffering as the pandemic deepens in the coming months, according to Heather Higginbottom, head of the bank’s policy group, the results of which are based on data from hundreds of thousands of Chase customers.
“We see real households survive this and can assume they are in dire straits if they don’t have additional savings and income,” Higginbottom said in a telephone interview. “We have a number of programs that will expire by the end of the year. There are families who depend on these payments, and many of them will be food insecure. We will see many families feeling very economic pain.”
The bank’s paper, echoing recent comments from CEO Jamie Dimon, adds another voice to the ongoing negotiations on a law to facilitate follow-up to the expiration of key elements of the CARES law in March. Lawmakers have now worked out the details of a slimmed-down bill that includes an additional $ 300 per week unemployment benefit and money for small business loans that could be voted on next week.
JPMorgan, the largest U.S. bank by assets, began sharing the roundup with members of the Biden transition team last week, said Higginbottom, a former Obama administration official.
The key elements of the paper – including calling for federal policy changes to boost family emergency savings and expanding affordable housing programs – are likely to find a receptive audience in the new Biden administration, which campaigned for the need, the most vulnerable Helping Americans.
However, what reinforces JPMorgan’s arguments is the anonymized customer data, which the bank says supports the reasons behind the reintroduction of unemployment benefits, especially as the economy is weakening amid rising coronavirus cases across the country. The money from the CARES Act earlier this year helped Chase customers avoid falling behind on mortgage payments, and their expenses and assets fell immediately after the benefits expired in August.
“There is concrete evidence that these expanded unemployment insurance payments have had a positive economic impact and will benefit individual families,” Higginbottom said. “They’ll spend the money and help the economy.”
Even if lawmakers manage to pass an auxiliary bill before going into winter break, Biden has announced that after taking office in January, he will seek more help to pave the way for ongoing negotiations. The scaled-down bill does not include another round of $ 1,200 direct payments.
Aside from the immediate crisis Americans are facing this winter, structural issues need to be addressed, Higginbottom said. Minorities and women are disproportionately affected by the pandemic, as job loss has been concentrated in the service industry, she said.
The bank suggested ways to increase household savings, including changes to retirement accounts to allow for emergency saving buckets and the creation of so-called baby bonds to fund education costs. The company also helped increase tax credits for low-income workers and remove barriers for people with criminal backgrounds to enter the world of work.
In some ways, this is an unusual stance for a corporate giant with assets of $ 3.2 trillion. The banking industry has historically been blamed for worsening inequality, targeting high net worth clients who have been the winners of the US economy. But the move is also part of a larger change recently among companies looking to play a more active role in society.
The bank launched its political group last year and announced $ 30 billion in October to drive inclusive growth.
“Historically, it has left some churches farther behind when we had an economic blow and recovered from it,” Higginbottom said. “Given the disproportionate impact on color communities, low-wage workers and women pushed into caregiving roles, if we fail to address some fundamental issues, we risk widening those gaps.”