Break out the tiny violin…
JP Morgan’s Jamie Dimon says his mega-bank is “under assault.”
That’s right, the man who oversees a bank that has been hit with $35,241,500,000 in fines in a mere three-and-a-half years for illegal activities is whining about being assaulted. He was so bold as to say the way he’s being treated is downright un-American.
“We have five or six regulators coming at us on every issue,” he spat to reporters on a conference call. “You all should ask the question about how American that is. And how fair that is?”
Wow, just wow. Holding banks accountable for hideous, deceptive, illegal activities is un-American and unfair? This guy has some big brass cojones…
I have a couple quick questions for Mr. Dimon…
How American is it to saddle its citizens with predatory loans it knows damn well cannot be paid back then lying to investors to sell them off in chunks of mortgage-backed securities? (For misleading investors regarding “toxic mortgages” JP Morgan got hit with a $12 billion fine… the largest for any company in corporate history. Investors lost close to $37 million).
How American is it for banks to illegally manipulate international currency markets? (JP Morgan was fined $1.34 billion for planning to buy and sell currencies after the market had closed so it could manipulate foreign exchanges).
How American is it to dupe customers into signing up for costly credit card services they didn’t need and then never delivering the services anyway? (JP Morgan was fined $309 million for charging its customers monthly fees for services like identity theft and fraud monitoring that JP Morgan never delivered.)
How does Dimon answer to these charges of being, at worst, deliberately criminal and, at best, pitifully negligent? Dimon chalked it up to his bank “stepping in dog shit, which we do every now and again.”
I might add that if you are regularly stepping in piles of dog shit that huge, you may want to start watching where you are walking…
I may also add that JP Morgan was the one creating the piles of dog shit for unwitting consumers to step in.
Dog shit aside, JP Morgan announced profits of $4.9 billion in the fourth quarter of 2014 alone. Since its fines started piling up in 2011, here’s what its stock looks like…
That doesn’t look like a company that’s being unfairly assaulted to me…
Now, the truth is JP Morgan’s profits have taken a hit in the wake of all of these fines. It suffered its biggest one-day fall in years last week, dropping 5.5% on Wednesday. But if it is being “assaulted”, I’d shudder to think what that chart would look like if those big, bad “un-American” regulators stopped picking on poor Jamie Dimon…
Now, I must admit that Jamie Dimon — blowhard criminal that is he — is right about one thing: banks are under attack.
But it’s not from overzealous regulators, it’s from enlightened entrepreneurs who are fed up with big banks’ predatory practices.
One company in particular has its blades trained on the throats of lending banks everywhere…
That company is Lending Club.
Lending Club (NYSE: LC) is a peer-to-peer lending firm that has been “crowd-sourcing” loans since 2007. Since its inception, the company has facilitated over $6 billion in loans to prime credit borrowers.
So why is this a threat to big banks?
It’s simple: you can get loans cheaper than with traditional banks. Much cheaper… the average borrower saves 31% on the total interest they will pay.
Here’s what CEO Renaud Laplanche told Forbes:
Operating cost as a percent of outstanding loans at traditional banks is typically 5% to 7%, but at Lending Club it’s less than 2%. “When you pay 17% interest on a credit card, 7% goes to paying the cost of the bank. We’re fully online and we use technology to lower costs,” he says. “A lot of banks are discovering that we we can underwrite, price and service loans at lower costs than they can.”
Lending Club loans are funded by investors for investors, circumventing the complexity of traditional banking and cutting down costs.
Here’s how it works…
Lending Club operates an entirely online operation that acts as a portal for borrowers and lenders. Since 2006, hundreds of thousands of borrowers have received loans from funding provided by nearly 100,000 people ranging from individuals to institutional investors.
Borrowers submit a simple application. The company then evaluates the information by accessing credit reports and verifying income, employment, and any other pertinent information.
About 10% of the applications are accepted, and the average borrower is in relatively good financial shape:
- 700 FICO score
- 16.7% debt-to-income ratio (excluding mortgage)
- 15.7 years of credit history
- $72,751 personal income (top 10% of U.S. population)
- Average loan size: $14,056
- It is a win-win scenario for everyone involved — plus you get to stick it to the big banks…
Even if you don’t personally need a low-cost loan, there are two distinct ways you can harness the power of peer-to-peer lending as an investor, and reap double-digit returns starting today…
The simplest way to play this trend is to buy Lending Club stock straight up. It IPO’d in December and, compared to other tech IPOs, its stock has been rather steady ever since.
It’s also made a few big moves recently to expand and diversify its customer base.
- It just teamed with Google to make low-interest loans to Google’s small-business partners
- It partnered with the U.S. Women’s Chamber of Commerce to provide loans for women-owned businesses
- It acquired Springstone Financial, which specializes in loans for private education and elective medical procedures
While the stock hit a high of $29 in December, it had been beaten back to a 52-week-low of $19.66 before the recent flurry of acquisitions and partnerships has pushed the stock back up to around $22. I see that as a good entry price…
There’s no reason the recent uptrend will not continue. A new report by Foundation Capital found that peer-to-peer lending will be a $40 billion dollar global business by 2016. By 2025 it will hit $1 trillion! But, as the CEO of one of the UK’s biggest peer-to-peer lenders puts it, this year will be the “tipping point” for the entire industry. Now is the time to act…
By investing in these peer-to-peer loans, you can currently lock in 11.05%… 14.05%… up to 17.33% annual returns with these contracts. The best part is that it is legally obligated to pay you each and every month for the duration of the contracts.
And the best part is you can invest in as many of these income-generating contracts as you like… for as little as $25 — which makes them exceptionally affordable for even the most cash-strapped investor.
Whether you buy Lending Club stock, or invest in one of its contracts, you may be asked how you heard about Lending Club.
Carefully step around the piles of dog shit, and say “Jamie Dimon sent me…”
