J.P. Morgan: Strategic Shifts Amidst Changing Consumer Behavior

Chase Mobile Banking Application

Today, J.P. Morgan & Chase updated its forecast regarding employment cuts, announcing expected reductions of 8,000 jobs from its mortgage operations and retail branches over the course of 2014. These cuts are over 2,000 more than original projections.Furthermore , this employment reduction is on top of the 16,500 cuts made last year by the U.S. banking giant. 

However, total employment will be reduced by only 5,000 jobs due to the addition of 3,000 new jobs to the bank's compliance department. Compliance departments of major banks have become increasingly crucial since the '07-'08 global financial crisis. J.P. Morgan has agreed to over twenty billion dollars in settlements over just the past year, with other federal probes waiting in the wings. However, it is an acknowledged reality that demand for compliance expertise currently exceeds the pool of qualified personal, suggesting that money, and perhaps jobs, will be shifting gradually toward that area.

Legal issues aside, a great deal of J.P. Morgan’s strategic shift can be attributed to changing consumer behavior amidst advents in consumer banking technology. In addition to the employment cuts the bank also announced today that it would be curbing the expansion of its branch network. Over the past three years, J.P. Morgan added 360 new physical locations. However, customers’ growing reliance on paperless banking and automated teller machines has undercut the utility of the once essential brick-and-mortar banking stations. Moreover, the recent spike in online banking, namely the ability to cash checks through photos on encrypted mobile applications, has reduced demand for representatives and teller transactions.
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Arthur Gosnell

Wyden Urges Extension of Tax Credits; Deductions

Despite indicating that there will not be any major tax changes for either individuals or businesses for this fiscal year, new Senate Finance Committee Chairman Ron Wyden has established extending U.S. tax credits and deductions as a priority.

U.S. SCF Chairman Ron Wyden

"Our hope is that we can get (the tax credits and deductions) reenacted promptly,” states Wyden. However, his plan does not end there, as he has admitted to using these tax credits as a bridge to “more comprehensive reform.” Regardless of his goals, Wyden has suggested that more substantial tax code changes are not close from occurring. This is reiterated by the fact that Republicans and Democrats alike are lowering their expectations of passing substantial legislation before the November elections that will determine which party controls Congress for the final two years of Obama’s reign as President. Wyden, an Oregon Democrat, supports a rule proposed by the IRS that could limit political spending from outside interest groups that are classified as non-profit social welfare organizations.

 This legislation, if passed, could be crucial for the upcoming elections. It would require all groups funding politics to disclose their donors. This change would impact Republicans as well as Democrats, which proponents argue would create a more democratic political environment.

Wyden has also recently expressed support for a lawsuit from Kentucky Republican Senator Rand Paul, which claims the U.S. electronic surveillance of telecommunications is illegal. Wyden stated this violates the Fourth Amendment. How this relates to his stance on tax-code revision is unclear, however it may be an attempt for Wyden to increase his popularity amongst a growing sector of libertarian-oriented Republicans.
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Chris Geary