Back in December 2010 I received a letter from Chase Home Finance, the servicer of my mortgage, informing me of an overage in my escrow account. This was not entirely unexpected, given that my escrow account had been running a surplus for some time, as a result of the reduced property tax rate, in turn a result of the drop in assessed value. While this had been anticipated, I still looked forward to receiving the check for $177.76, which, according to my account had been mailed out on January 26th, a full six weeks after the initial notification.
Why it would take them this long to cut and mail a check was beyond me, but at this point I was only slightly irritated by this. Why they would issue and mail me a physical check through the US Postal Service was even more beyond me, given that for years my payments were regularly and reliably made electronically via bank transfer. Wouldn’t is be easier – and not to mention faster, cheaper and less taxing on the environment – if they just returned to overage in my account the same way they received it, via near-instant electronic ACH transfer? One would think, but then one would not be attuned to how large Too-Big-To-Fail banks think and operate.
I patiently waited another full month for my check – in vain. Finally, on March 1st, my mortgage escrow balance – which, of course, bears no interest – was credited with $ 177.76. Confused, I called Chase Home Finance and, after a mere 5-6 minutes navigating their automated “customer service system” (“customer avoidance system” would be a more apt description), I was connected to “Stacy”. And, if the tell-tale lag and poor quality of the call were not clear proof that this call was being routed via VOIP telephony to an overseas call center, “Stacy’s” thick accent and poor diction was a dead giveaway.
After I established my identity by sharing various personal information – which I had already done with the automated system that connected me, mind you – “Stacy” informed me that my check had been returned by the US Postal Service because it was – so sorry – “undeliverable”. Never mind that I had been receiving all sorts of mail, including my statements from Chase, reliably all along, thanks to a USPS order forwarding my mail. Undeterred, I provided an alternate mailing address and was assured that my escrow refund check would be forthcoming.
And, sure enough, on March 3rd, my account was debited for $177.76 and two days later I received a letter in the mail confirming my new address and thanking me, signed by one Mr. Larry Thode, apparently the “Vice President of Customer Care”. Interestingly enough, the letter had a return address of Columbus, OH, where Chase Home Finance is apparently headquartered, even though my payments are processed in Phoenix, AZ. Even more interesting is that Larry Thode managed to “sign” my letter – in an attempt to provide “Customer Care” no doubt – even though, according to LinkedIn.com, ole Larry lives and works in Monroe, LA. In his LinkedIn profile, Larry describes himself as quite the go-getter and his “Responsibilities have included developing operational disciplines and strategies to improve both top and botton line results. I am able to inspire, and keep things simiple, and create winning teams.” While a grasp of proper spelling and diction seem to elude Larry, he should obviously be encouraged to enumerate once more to add “and robo-signing bullshit letters to customers” to his skill set. But, I digress.
On March 22nd, I realized I STILL had not received my refund check and, figuring three weeks is a long time even for the USPS – all the more so given that Larry’s delightful letter and my new account statement had gotten here since then – I decided to brave Chase’s IVR system once again. After the inevitable goat-rodeo that they call their “automated customer service system”, I am speaking with “Cheryl”. Again, the noticeable lag, poor voice quality and a THICK accent that makes it nigh impossible to understand what is being said and makes it equally clear that I am speaking to someone in Chennai or Bangalore. “Cheryl” explains that it takes 21-28 days for them to “process” my check and then another 8-10 “work days” to mail it out. When I question why it would take this long to simply mail a check, she explained that Chase had to “calculate” and “process” my payment, even though this was the second time this payment was being attempted. Undeterred, I asked “Cheryl” why, since I made all my payments electronically, why couldn’t Chase simply return the favor and process the refund the same way, via ACH transfer, instead of a physical check? Or, even better, why not just apply the money (MY MONEY, after all) directly to my mortgage payment or credit card account? “Cheryl” responded that they had to “follow their policies and procedures”, which seem to be slightly slanted in favor of Chase and to the detriment of their actual customers. I wonder if Larry Thode knows about this since this seems like an opportunity for some serious “Customer Care”, no? I would write him about it but I’m not sure if I should send the letter to Columbus, OH or Monroe, Louisiana…
Why does this matter you ask? And when can we get past your measly $177, Dan, and on to the $33 billion you teased us up with in the headline? Good questions indeed. Well, one should consider that Chase is the third largest mortgage servicer in the US, with more than 9 million accounts. So, while holding onto my $177 for an extra three months may seem like a small issue, once you multiply it by 9,000,000, things start to make sense. Especially when you consider that my mortgage is rather small and at a fairly decent rate of 5.5%. But, even using my relatively low interest rate and applying it to outstanding amount of $177.76 for the three-month period in question, we get $2.44 of interest charges. Chump change, you say, and I would agree. But, once we multiply it by the 9 million mortgage accounts (many at much higher rates) that Chase services, we are talking about $21,997,800.00! To most people, myself included, this is a huge amount of money. Even for Chase, getting $22 million (for nothing!), is real money. After all, it easily covers their CEO Jamie Dimon’s well-deserved bonus of $17 million for 2010, with $ 5 million left over to throw a party and pay the little guys, including Larry Thode and his “customer care” team.
But, of course, Chase not only services mortgages, but also revolving consumer debt, including credit cards. And, obviously, it stands to reason that they would apply this windfall of free money – withheld from consumers like you and me – to the most profitable use available. The current (March 2011) average credit card interest charged is 16.82 percent. Three months of interest on my $177.76 at this rate comes to $7.47. Assuming I am not the only person being stiffed here this comes to $67,273,272.00 when applied to all 9 million Chase Home Finance Mortgage holders. Now, this is the sort of mind-boggling “financial innovation” often touted by Mr. Dimon and other bankers when they are pressed to justify their outlandish pay packages. A cool $67 million in “free” money out of nowhere, what’s not to like? Well, perhaps the small detail that it’s not “free” (consumers are paying for it) and it’s not “out of nowehere”, it’s the result of fraud, or, excuse me, the result of Chase’s “policies and procedures”.
So, now you’re thinking: “Nice rant, Dan”, but “what about the $33 billion Chase owes the taxpayer? Where is that number from and what’s up with that?” Great question. Chase, who like their fellow Wall Street bankers at Bank of America, Goldman, GE and others, like to brag about their cleverness and their ability to “innovate” (by which they mean such genius concepts as overdraft fees, hi-lo sequencing (Google it!), securitization and credit default swaps, all swell ideas..). They will also throatily insist that they paid their TARP bailout money back, though generally forget to mention another government program that has kept them alive and well-paid, even as main street continues to struggle through a tight credit market. This program, known as the Temporary Liquidity Guarantee Program, or TLGP is perhaps less well-known than it’s cousin TARP, but a sop to Wall Street nonetheless. TLGP allows big banks to borrow money under a federal guarantee, giving them access to funds at the same rate the US government enjoys. Oh, and guess who pays these loans back should one of these banks default? You guessed it: the taxpayer. Chase has yet to repay $33 billion loan we guaranteed for them, but insists now they are healthy and profitable enough to boost their shareholder dividend, a move that will net their chief executive, Mr. Dimon, an estimated $5.7 million additional windfall.
‘Cause, y’know how hard it is to make ends meet with a measly $1.3 million base salary and $17 million bonus.