Will tax breaks "Chase" Bear Stearns? [UPDATED]
The fallout of JPMorgan Chase’s take over of Bear Stearns is still unclear, but it will certainly be felt beyond the financial sector in New York City where both firms have their headquarters and where we have the added anxiety of $317 million in past corporate “retention” deals.
The inevitable layoffs associated with the plan are already being speculated about. Taxpayers should expect that city officials will hold the firms' accountable for job promises. But don't hold your breath.
Not surprisingly at GJNY we call these type of deals blatant corporate giveaways. But now that the subsidies are out of the bag, it's worth noting their status. Yet, finding the answer isn't so easy since the annual report released by the New York City Industrial Development Agency (IDA), the quasi-public entity that negotiates and oversees these deals, is notoriously inconsistent and excludes deals more than eight years old.
We resisted the temptation to throw up our hands in frustration and instead compiled figures from several years of annual reports. We’ve requested updated figures from the IDA and we'll update this entry when we get them.
Chase Manhattan Bank (now JPMorgan Chase) - approved for $211.8 million in 1988
Jobs in 1988: 5,000
Jobs retention promise: 4,500
Jobs creation promise: 1,450
Jobs in June 2003 (latest public figures): 3,983Jobs in December 2006: 3,506
Subsidy used as of June 2003 (latest public figures): $44.5 million
Bear Stearns - approved for $11 million in tax breaks (and other subsidies worth up to $20 million) in 1991 in as part of a plan to move workers from Manhattan to Brooklyn
UPDATE: According to IDA officials the IDA merged the 1991 and 1997 deals. As of June 2007, the firm had 7,667 jobs not the 9,284 we listed below from the annual report. The larger figure included consultants which the IDA does not counted towards the firm's job compliance.
Jobs in 1991: unknown
Job retention promise: 1,435
Jobs creation promise: 229
Jobs in June 1999: 6424
Subsidy used: Because this deal has expired, presumably the firm has received all benefits.
Bear Stearns - approved for $75 million in 1997
Jobs in 1997: 5,700
Jobs retention promise: 5,700
Job creation promise: 13,300
Jobs in June 2007:
Subsidy used as of June 2007: $14 million
The subsidy silliness continued into the summer of 2007 when JPMorgan Chase was approved for at least $230 million in post 9/11 resources to move to former Deutsche Bank site (across the street from the World Trade Center) site from Midtown. It's not surprising Chase is backing out of the Downtown deal since the Deutsche site is far less appealing than Bear Stearns' spiffy Madison Avenue digs.