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J.P. Morgan to Spend $138 Milllion on Luxury Jets and Hangar

By Jeralyn, Section Economy
Posted on Mon Mar 23, 2009 at 10:46:51 PM EST
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There's tone-deaf and there's just plain stupid. J.P. Morgan apparently is both. After receiving $25 billion in TARP funds, the company is proceeding with plans to spend $138 million on two luxury corporate jets and build ""the premier corporate aircraft hangar on the eastern seaboard" to house them."

According to JPMorgan Chase architects, the new hangar will be built with reclaimed wood, quarry tile and even a "vegetated roof garden."

The Gulfstream 650's are described by the manufacturer as the "fastest," "widest" and "most comfortable" private jet ever with superior cabin amenities, an optional stateroom, and 12 interior designs to choose from.

The company says it's not using the TARP funds for the project. [More...]

Apparently, the company feels victimized:

[O]n March 11, the chairman of JPMorgan Chase, Jamie Dimon, said he could not understand why corporate America has such a bad image.

"When I hear the constant vilification of corporate America I personally don't understand it," Dimon said.

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    J.P. Morgan to Spend $138 Milllion on Luxury Jets and Hangar | 42 comments (42 topical)

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    I love the part where they (5.00 / 7) (#1)
    by Anne on Mon Mar 23, 2009 at 10:56:19 PM EST
    say that TARP funds aren't being used for this expenditure...yeah, okay.  So, I have $50 in my wallet, and I'd really like to a hair cut and a manicure, but I have to use that $50 for bills and such.  If someone gives me $50, I can say that I am using that money to pay the bills, and "my" money to get my hair cut and my nails done.

    I am so tired of these corporate executives thinking we are so stupid we would buy their explanations.

    Almost, (5.00 / 1) (#4)
    by bocajeff on Mon Mar 23, 2009 at 11:10:33 PM EST
    It's not just corporate executives. It's anyone in power. Look at Congress. Look at the White House. Even the bigwigs at major labor unions. Homeowner Association Boards. PTA's.

    Basically, when you give people lots of power, access to funds which are not their personal funds, then you will get this type of behavior.

    It's power.

    Parent

    Personally... (none / 0) (#38)
    by kdog on Tue Mar 24, 2009 at 12:11:30 PM EST
    I think private jets for congress-critters need to go...if they are donated by constituents you have the appearance of corruption and/or special favors (if its not the reality), and maybe if they flew coach more they'd be a little more in touch with their constituents.

    They might not be corrupt "in their core being" when they set out on their political carrers, but if there is one thing history has taught is that power and insulation from the masses corrupts people, even those with the best of intentions.

    I'd even reserve Air Force One for overseas travel, and make the president fly coach domestically.

    Parent

    Maybe if they pooled (5.00 / 3) (#9)
    by lilburro on Tue Mar 24, 2009 at 12:58:32 AM EST
    the sauna money, the company car money, the black tie event money, the bonus money, and the leather chair money, they wouldn't have needed a bailout after all!  I mean we have to be up near a billion when you pile it all together right?

    Parent
    Ahhh, can't remember where I saw it, but . . . . (5.00 / 4) (#2)
    by nycstray on Mon Mar 23, 2009 at 11:07:32 PM EST
    it was about JPMC getting TARP funds, but not being one of the companies that really needed them. They were actually doing ok. The drift I got was they didn't get the funds because of their business practices/status, but for "other"* reasons?

    I'm guessing we're going to have to look at each company and their spending. I haven't looked into this story, but are they going to cause me to take tone deaf to a whole new level?!

    It's kinda "funny", but this whole financial meltdown has caused me to look at self sufficient with a whole new perspective.

    My recollection is that banks (5.00 / 1) (#22)
    by Anne on Tue Mar 24, 2009 at 08:14:05 AM EST
    that were not in financial trouble were encouraged - no, strong-armed - into taking TARP money as a way of obscuring which banks taking the bail-out money really needed it; the thought was that giving money only to those banks that needed it would be like hoisting a huge neon sign above those banks that said, "TROUBLE."

    Why they didn't think the public would assume all these banks were in trouble is something I cannot answer.

    That JPM is not using TARP funds at all is fine; the perception that is being created by this latest project though, is one of fiddling while Rome burns.

    Parent

    They took over WAMU (none / 0) (#3)
    by Inspector Gadget on Mon Mar 23, 2009 at 11:09:41 PM EST
    Were they compensated for doing that?

    Parent
    WaMu is claiming JPMC (5.00 / 1) (#24)
    by BackFromOhio on Tue Mar 24, 2009 at 08:48:05 AM EST
    got WaMu at below fire sale prices.

    Another potential boondoggle for Wall St: Who is going to be the "Managing Member" or whatever of the public-private partnerships? And I'll bet those with management &/or advisory positions with those partnerships get hefty fees off the top, pre-financial crisis style private equity fees.  

    Parent

    My favorite bit here (5.00 / 2) (#5)
    by otherlisa on Mon Mar 23, 2009 at 11:30:58 PM EST
    was how the rooftop garden might attract...birds...and that's just what you want near an airport, right?

    It's not what you think. (5.00 / 4) (#13)
    by Fabian on Tue Mar 24, 2009 at 03:53:41 AM EST
    Green roofs are created with succulents - plants that can tolerate periods of drought and full sun.  You can't really grow anything tall because the winds will flatten it and the growing media (not soil) is only a few inches deep.  In fact, part of the annual maintenance is removing any wayward plants that would be too big.  

    I saw a presentation on it.  Green roofs are great ideas, but precisely engineered.  The point is not to look good, but to lower energy costs for the building, especially cooling costs.

    Parent

    Good to know... (5.00 / 1) (#14)
    by otherlisa on Tue Mar 24, 2009 at 04:27:26 AM EST
    And seriously, I am all in favor of roof gardens. I've read a little bit about the benefits they can have in a "Green" architectural scheme.

    It's just the whole structure upon which this particular garden would be built that disgusts me.

    Parent

    Oh, poor executives, (5.00 / 3) (#6)
    by jeffinalabama on Mon Mar 23, 2009 at 11:35:51 PM EST
    who might have to travel first class without these jets!

    James Dimon, you won't be travelling coach, and if you can't handle the flight, with all the capacity of commercial jets to keep you in touch, then you, sir, are too dammed important to fly at all.

    Can we surround Mr. Dimon with the fluffy pillows?

    Nobody expects the Spanish Inquisition!

    If this ain't criminal, it ought to be.

    I think you left something out (5.00 / 2) (#7)
    by gyrfalcon on Mon Mar 23, 2009 at 11:49:13 PM EST
    from the article.

    "Joseph Evangelisti, a spokesman for JPMorgan Chase, said no TARP money would be used to make any payments for new jets or jet hangar improvements. He refused to comment on whether JPMorgan had put a down payment for new planes, saying only that any future jet purchases would be part of its normal aircraft replacement policy, and that JPMorgan Chase will repay all TARP money before it makes any payments for new planes or renovations."

    Maybe that's a lie, but it should be easy enough to keep an eye on it.

    You'd think shareholders would have had enough of this extravagant spending by now, but if they don't care, there's not a lot of say the rest of us have if they do pay the TARP money back before they do it.

    These sorts of purchases and perqs are (5.00 / 4) (#8)
    by jeffinalabama on Mon Mar 23, 2009 at 11:52:28 PM EST
     a symptom of the problem. I say treat the symptoms.

    Too big to exist.

    Parent

    Right (5.00 / 2) (#10)
    by cal1942 on Tue Mar 24, 2009 at 01:39:11 AM EST
    I'm probably a bit too simple to get this but I have to wonder why these people feel they need their own air force.

    Given the robust nature of available communications technology I really don't see any reason why these people have to fly anywhere on a regular basis that would justify their own fleet.  In the event that some flying is truly justified there is no reason these people can't fly commercial and coach at that.

    Parent

    But that's there decision to make (5.00 / 1) (#17)
    by Lacey on Tue Mar 24, 2009 at 07:19:17 AM EST
    It doesn't matter if you, me or anyone else thinks they should own corporate jets. That decision rests with the board of directors. And if they're paying back TARP funds first then it isn't really anyones business who they spend their money.

    Parent
    Isn't anyone's business? (none / 0) (#31)
    by sj on Tue Mar 24, 2009 at 10:03:39 AM EST
    I think it's everyone's business.  How did AIG get "too big to fail"?  I doubt that it was an overnight event.  

    Chase is quite frankly freaking me out.  Once the takeover of WAMU is complete, Chase will have nearly all of my banking business.  Mortgages, IRAs, checking, saving, credit card, the whole gamut.  And I never opened a single account directly with them.  All those accounts were the results of mergers/takeovers.

    Then again, I never financed my mortgage directly with WAMU either.

    But back to Chase, just because they pay back TARP funds first doesn't mean they are being fiscally responsible.  I find it frankly infuriating that they are financing this partially by charging me $36 OD charge on 4 checks when my account was short less than $5 and they paid themselves first so that ALL the checks would show NSD.  I'm glad they didn't return the checks, but still.  It was over $100 for being less than $5 short.

    Parent

    The whole culture (none / 0) (#36)
    by gyrfalcon on Tue Mar 24, 2009 at 11:33:04 AM EST
    of big business, and particularly of financial institutions, is to spend extravagantly on stuff like this to demonstrate how flush with cash they are that they can afford to do it.  It reassures other rich people and institutions that they're also vastly rich and therefore a totally safe and likely very profitable place to do business.

    That's why they sponsor golf tournaments and have meetings and retreats at expensive resorts and throw wildly expensive dinners and nights out for their wealthiest customers.

    Parent

    Just as a pimp (none / 0) (#41)
    by cal1942 on Tue Mar 24, 2009 at 03:39:08 PM EST
    would buy a fancy set of wheels.

    This is our level of decay.

    Parent

    Hardly (none / 0) (#42)
    by gyrfalcon on Thu Mar 26, 2009 at 12:00:17 AM EST
    The analogy is entirely inapt. (What customers is the pimp trying to impress?)  Not to mention this is hardly new either here on in the world.  It was ever thus, and always will be.


    Parent
    Impressing customers (none / 0) (#43)
    by cal1942 on Fri Mar 27, 2009 at 11:21:25 AM EST
    is impressing customers.  Nothing inapt about the comparison.

    Parent
    Apparently (5.00 / 4) (#12)
    by cal1942 on Tue Mar 24, 2009 at 02:01:10 AM EST
    there are two versions regarding the enhancement of the hangar facilities.

    JPM claims that their renovations will be stretched out over nine years but the county says that JPM would complete renovations within six months of assuming the lease.

    Then there's this:

    Joseph Evangelisti, a spokesman for JPMorgan Chase, said no TARP money would be used to make any payments for new jets or jet hangar improvements. He refused to comment on whether JPMorgan had put a down payment for new planes

    To say that it's none of our business if TARP funds are paid back first is ignoring the point that the mega banks, since they are a massive factor in the financial industry, are indeed our business.  That's what happens when you become too big to fail.

    The ultimate solution to this is establishing banking laws like the two Glass-Steagall Acts, eliminate bank holding companies and bust the mega banks into many, many smaller pieces.  New anti-trust laws have to be established to break up and prevent this oligopoly from ever again raising its ugly head.

    Parent

    Don't have to go so far (none / 0) (#25)
    by BackFromOhio on Tue Mar 24, 2009 at 08:52:58 AM EST
    it would be nice if existing regulations were fully enforced; serious enforcement efforts alone would have curbed many excesses. Remember the AIG whisteblower who was ignored for years by the SEC? I am willing to venture a guess that was far from the only instance of failure to enforce existing laws.

    Parent
    I'd like to see (none / 0) (#40)
    by cal1942 on Tue Mar 24, 2009 at 03:28:54 PM EST
    the evidence that we don't have to go this far.

    Commercial banking under Glass-Steagall served us very well for many decades.  There was never a rationale for dismantling the limitations on commercial banking except to make a higher profit and to enable the big to get enormous.  There was never any other purpose served, there was no enhancement that would have improved the economy.  Destroying the wall between commercial and investment banking was the last straw.

    Failure to enforce existing regulations made matters all the worse but probably couldn't have really stopped what happened.  This is a systemic problem.

    Parent

    Many of the healthy financial institutions (5.00 / 1) (#15)
    by Green26 on Tue Mar 24, 2009 at 04:29:36 AM EST
    that received TARP funds are looking into repaying the TARP funds as soon as they can. They no longer trust the government, and want nothing to do with the seemingly out-of-control Congress.

    The US and Paulson strongly encouraged many of these companies to take TARP funds, even though they didn't need them. Then, in the stimulus bill, over objections from the Obama administration, Congress/Dodd inserted his executive comp limitation and made it retroactive to over all TARP recipients--not just ones receiving new funds (as Geithner had proposed).

    Now, Congress is considering the "retroactive" tax on bonuses, which, depending on which bill, would cover either some or most of the TARP recipients. By the way, I am among those who believe this tax would eventually be held to be unconstitutional.

    From today's AP: "Executives of other troubled companies signaled they would not make deals with a federal government that revises agreements after they are signed."


    Parent

    Pull the other one! (5.00 / 1) (#16)
    by pcpablo on Tue Mar 24, 2009 at 07:08:11 AM EST
    "The company says it's not using the TARP funds for the project"

    But the private stash of money will be replenished by the TARP funds.

    No... (5.00 / 1) (#21)
    by Lacey on Tue Mar 24, 2009 at 08:02:14 AM EST
    The company says it's paying back the TARP funds before going ahead with the plan.

    Parent
    As I said in a post yesterday on this issue (5.00 / 1) (#18)
    by coast on Tue Mar 24, 2009 at 07:30:50 AM EST
    you have to consider also that at least they purchased from an American company.  Therefore they are at least supporting American jobs.  I might not like the fact that they have spent the money on something that IMO is unnecessary, but I also know people who work at Gulfstream who are happy they still have jobs.  I think this is similar to arguement going around about companies having conferences in Vegas and other locals that some may find frivolous.  As one who lives in an area where companies often come to host conferences, the administration and Congress need to consider that those activities support jobs as well.

    Tax write-offs (none / 0) (#27)
    by BackFromOhio on Tue Mar 24, 2009 at 08:56:40 AM EST
    and how much will JPM get in tax write-offs in form of accelerated depreciation on investment in planes?

    Parent
    Depending on purchase and placed in service (5.00 / 2) (#30)
    by coast on Tue Mar 24, 2009 at 09:29:24 AM EST
    dates, they should be able to use the bonus 50% depreciation provision of the ARR act plus the regular depreciation on the adjusted basis.  I think planes are depreciated over 5 years.  On $120M purchase they may be looking at approximately $72M in depreciation.

    Parent
    Agree with it being tone deaf, (5.00 / 2) (#19)
    by Bemused on Tue Mar 24, 2009 at 07:36:37 AM EST
     regardless of JP Morgan's overall financial situation or plan to retire TARP debt. On the other hand, having corporations purchase goods and construct buildings probably has a much more immediate and tangible trickle-down effect than many other uses of that money.

      Paying already rich employees even more money doesn't always lead to domestic consumption because many of those people will invest most of that money rather make consumer purchases.

      "Investment" can be a good thing but not necessarily. The CDSs are a prime example, particularly when purchased by people without an interest in the underlying security. If I own a security and buy a CDS against that same security it is somewhat like purchasing insurance against decline in value of the security. But, if I buy a CDS against a security in which I hold no interest it's essentially straight-up gambling.

       My "gamble" can be argued to bring money to the market, but is it really doing that or more accurately placing money in one sector of the market (which is nothing more than a speculative pool on the relative performance of financial products) instead of placing money in market sectors that can lead to the creation of tangible wealth?

      At least an aircraft and a hangar have tangible value and require people to build who get paid for it.

    J.P. Morgan the few the proud (5.00 / 1) (#26)
    by joze46 on Tue Mar 24, 2009 at 08:54:26 AM EST
    Looking at the possibilities.

    The understanding of where the bail out money is going is becoming timelier as it should. This is close to the transparency America should have but we are not yet at that point when one can turn to a public channel that has a report on all checks cleared for the day.

    Yes, from your own bank, but how about the company you're investing your retirement in, yes those companies out there will need to open up the books instantaneously to investors. In other words if you go public on the stock market you really are public. An investor will not have to wait for a quarterly report because there is a good chance to cover up bungling in easy way as we are learning. More over the reporting of the trading will be open to the public. Everyone and anyone should be freely able to connect to exchange electronic reporting system.  

    When Joe six pack can review publically what has been spent by his government with in the last hour is around corner or a ratio to proportion where corporations are making profits that do not fit into a fair cultural progression, or make sense with supply and demand principles will likely happen. Political and insider corruption should stick out like hell.

     We all will be able to call companies out to see who owns who by whom rather quickly.  Here, the public themselves could very well be the quality control or if you prefer the regulation in a free market. Which should be to core sense of a free market? Similarly as this blog does in a legal sense.

    To be sure Characters like Crammer, of CNBC, will disappear, and so will many middle operators, Commenter's. A common investor will very likely be able to go to a local currency exchange to buy and receive stocks and bonds or trade in money and purchase securities as easy as and for as little as buying a lottery ticket or placing a bet in a casino. The system is so lopsided for the rich it is pathetic for any corporate head to even wonder why America middle class thinks so low off this system.

    Corporate upper class has lived for a century in the Jekyll Island economy called the Federal Reserve, and I agree with Ron Paul this system the core of cultural corruption world wide, is unconstitutional and worse legally can not be not be audited, is out right hypocrisy and total economic tyranny. A monumental example of insider contradiction is MSNBC with commentaries or privy to trillion dollar deals by Andrea Mitchell wife of former Chairman of the Federal Reserve board Allen Greenspan. Here, likely doing favors behind huge money deals private and public.      

    There is so much secrecy in accounting practices with this type of economy for decades of built in melt down rules that are not good for a free economy it is  no wonder if I could perceive and after a Harvard education Osama Bin Laden clearly could see the real way to destroy America is by the economy.

    Please America between not being able to check and review National Security Secrets like waging pre-emptive wars with torture not being able to look at its Judgement to see if it was moral by viewing them with in a life time they have been done. Worse no ability to audit and review the actions of the Federal Reserve at all is our core problem. I am so angry...our system of government is very dysfunction but repairable. All this needs to be "RESET" to be done different. Especially the legal stuff.  


    And the media, which with (5.00 / 1) (#28)
    by BackFromOhio on Tue Mar 24, 2009 at 08:59:11 AM EST
    rare exceptions, isn't asking the important questions or, when it asks important questions, accepts official explanations rather than investigating...

    Parent
    the media (5.00 / 1) (#34)
    by Bemused on Tue Mar 24, 2009 at 10:33:42 AM EST
     seems intent on framing it as simply "bad guys" enriching themselves which makes people mad but a necessary evil to avoid economic catastrophe.

      One of many problems with this analysis is that common sense tells us we are not at risk of anything approaching the great deprression. When the money supply contracted the it was in an environment where widespread tangible wealth already existed.

       For example, unlike small farmers in rural areas defaulting and there being little use for their property, defaulting on homes, there is an obvious use for residential houses-- people can live in them. At a certain price there is still a market for places to live. But, we are told we can't allow the market to adjust to meet that price and should endeavor to artificially support the price of houses. No doubt allowing houses to decline in value to meet demand would hurt people who are heavily leveraged in the homes they own, but it would be a boon to people  who might want houses but are unable or unwilling to pay artificially high prices because they want a place to live not a speculative investment to store and grow equity.

      If I had 400,000 in liability on a house once valued at half  a million and the house in now FMV 300,000, I can still live there if I continue paying my mortgage. If I default and the bank sells the house for 300,000, I'll owe the bank about $100,000 and have no house. Not good for me but it is good for the person who gets my house for $300K as opposed to her having to buy an equivalent house in a "rigged" market for $500,000.

       My point is that the house exists, it has value and a decline in price helps some consumers  and also helps offset inflationary pressures in other sectors.   But, if we allow housing prices to decline to the market, the big losers are the people who bought the paper and they have outsized influence.

    Parent

    So (5.00 / 1) (#29)
    by TeresaInSnow2 on Tue Mar 24, 2009 at 09:01:47 AM EST
    So, they're buying the jets.  They didn't need TARP money in the first place and they're paying it back.

    Since they feel that now is a good time to do frivolous things, can we scratch them off the list of people who could potentially get bailout money in the future?

    Enjoy your jets, JP Morgan.  Just don't expect us to come to your rescue when things go south.  You obviously blow your money like a kid in a candy store.

    Stockholders (5.00 / 1) (#33)
    by rea on Tue Mar 24, 2009 at 10:21:21 AM EST
    I don't see how this is less offensive if TARP funds aren't used for it.

    Corporate management in this country is not subject to adequate controls in the interests of the stockholders.  Morgan/Chase buying this stuff with stockholders' money represents mangement buying themselves expensive toys with stockholders' money.

    The US has developed an aristocratic class, neither capitalists nor labor, who skim off the profits of our society for themselves.

    I wrote a while back about (5.00 / 2) (#37)
    by NYShooter on Tue Mar 24, 2009 at 11:42:40 AM EST
    my neighbor, a man who, after 35 years on the same job, was laid off (actually terminated.) That, combined with serious health problems, put him into a terrible financial mess. He had to sign up for early SS benefits.

    He opened a separate SS checking account with a $25 deposit, and had his SS money direct deposited. When his first SS funds hit, he went to the grocery store to buy some food, but was told his check was no good. Checking with his bank, he was told J.P. Morgan/Chase had put a "freeze" on it. He asked me to help him straighten out this mess, and to tell you I was shocked at what I discovered would be the understatement of the century.

    I was told to call Chase's "debt mitigation dept," but when I did, the recording said "there's no one here to help you at this time." This went on for three days before I got a real live person. ("person" might be stretching it) When I told the representative they couldn't seize those funds because SS money is exempt, she said the $25 used to open the account wasn't SS money, therefore the account was "co-mingled." That being the case, Chase had every right to seize the account, and they would need three months of all his records to determine if the funds were really SS funds.

    I'm not going to go through all the details of what transpired in my getting the account re-opened, except to say, I will hate Jamie Dimon every day for the rest of my life. The cold-hearted, arrogant, and I would say sadistic, attitude they took against my sick, older neighbor is a story that should be front page news on every newspaper and news program in the country.

    These people, who are yanking us around like play-toys, are truly reprehensible creatures.

    Luxury jets & hangars are no surprise; no surprise at all.

    Parent

    Time to tar and feather someone (5.00 / 1) (#35)
    by Dadler on Tue Mar 24, 2009 at 10:51:10 AM EST
    Literally.  Genuine shame and full public ridicule (pies in the face, buckets of water poured over the head, those feathers and tar) not just second hand ridicule in the media, would go a long way.  We need some effective and political performance art.  We need to make literal fools out of these folks.  And soon.  The time for reason and rationality with them has long since passed.  Socks full of horse manure are in order.

    So little talent, so much monney (none / 0) (#20)
    by koshembos on Tue Mar 24, 2009 at 07:57:18 AM EST
    The morons that ran this country into the ground flying their corporate jets feel entitled to not just money they didn't make but also to respect.

    It's the Bourbons all over again.

    well, they've got talent (none / 0) (#23)
    by Sui Juris on Tue Mar 24, 2009 at 08:25:31 AM EST
    it's just for something different than what we'd like it to be.  I think there's a pretty clear talent for finding capital, and peeling as much of that capital away into personal reward.  More talent at that than I've ever had, for sure.

    Parent
    Apparently only 1/10th % (none / 0) (#32)
    by SOS on Tue Mar 24, 2009 at 10:08:10 AM EST
    of the population has enough street smarts to understand why these guys get away with this stuff.

    I mean what's with people? How much shafting can people take?

    If their belly is full... (none / 0) (#39)
    by kdog on Tue Mar 24, 2009 at 12:13:44 PM EST
    they can take as much as you could possibly imagine...only when the belly starts to wail do the balls drop.

    Parent
    J.P. Morgan to Spend $138 Milllion on Luxury Jets and Hangar | 42 comments (42 topical)

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