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Comptroller Schroeder sends JP Morgan Chase a $45 million message

May 30, 2012
Press Release

Comptroller Mark J.F. Schroeder is pulling $45 million in Buffalo Sewer Authority funds out of an account with JP Morgan Chase and into a higher-yielding account with First Niagara, a move that will benefit city taxpayers and the local economy, in addition to sending a message to the troubled banking giant.

“Not only will the funds earn more interest with First Niagara, a major local employer headquartered in Buffalo, but it also sends a crystal clear message to JP Morgan Chase that the City of Buffalo is not happy with their business practices,” said Schroeder.

Since Schroeder took office in January, he has been looking to address concerns the Buffalo Common Council has about funds the city has deposited in accounts with JP Morgan Chase.

“I understood the Common Council’s concerns from day one, but as chief fiscal officer, I couldn’t do anything that would cause the city to lose money,” said Schroeder.  "Fortunately, we were able to find an interest rate that would make the city more money than what it was earning with JP Morgan Chase.”

The $45 million will be earning .30 percent interest with First Niagara, .05 percent higher than the .25 percent interest rate JP Morgan Chase was offering.

“I commend the comptroller for seeking a solution to concerns raised by residents, while at the same time saving taxpayers’ money by doing business with a local bank,” said Council President Richard A. Fontana.

“I think this sends a strong message to JP Morgan Chase that the City of Buffalo is committed to doing business with banks that invest in the community,” said Delaware District Councilman Michael J. LoCurto.

“Investing the Sewer Authority funds with First Niagara is a win-win for the City of Buffalo,” said South District Councilman Christopher P. Scanlon. “We are getting a higher return on our investment with a local institution that plays a tremendous role in the Buffalo community.”

“We hope this move will make JP Morgan Chase take a hard look at their role in the community, and decide to play a more active role in improving conditions in the places that they do business,” said Masten District Councilman Demone A. Smith.

Another benefit of the switch, said Schroeder, is that it will be easier for sewer authority employees to cash their paychecks, since First Niagara has nearly 100 local branches.

“We will continue to seek the highest possible rates for the city’s investments and explore the option of pulling more funds out of Chase in the future, especially if the bank’s poor business practices continue,” Schroeder said.

He added that the Glass-Steagall Act, which separated retail banks from investment banks, could have prevented the bank’s recent troubles if it had not been repealed in 1999.  Schroeder said that the Volcker Rule, part of the Dodd-Frank Act passed two years ago, does not do enough to keep big banks from engaging in risky behavior.

“I urge the federal government to strengthen regulations on these big banks,” said Schroeder. “Meanwhile, the Comptroller’s office and the Common Council will be watching JP Morgan Chase very closely over the next few months.”

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