May 24, 2012
Mr. John E. Nixon
CPA, Director
Dept. of Technology, Management & Budget
George W. Romney Building
111 South Capitol Avenue
Lansing, MI 48933
Dear Mr. Nixon,
We, the undersigned legislators, are writing to request answers and action on behalf of Michigan taxpayers. It is our understanding that the state has a contract with JPMorgan Chase to administer its unemployment insurance debit card benefits and that this contract establishes numeroususurious fees on the citizens who need this service. We believe that allowing a multi-billion dollar entity such as JPMorgan Chase to pad its profits by syphoning away a portion of the funds Michigan taxpayers have put aside to assist unemployed workers is unacceptableand we urge you to reconsider this contract.
Our understanding is thatMichigan's unemployed are charged $1.00 to check their account balance at a Chase Bank ATM (two uses are free) and $1.00 if a payment is denied (one is free). They pay $1.00 to check the balance at an out of network ATM and $1.50 for a withdrawal out of network. This may not seem like a lot but it adds up, especially for people who are out of work. According to the National Consumer Law Center, states with similar programs do not allow such fees and we want to be sure that our understanding is consistent with your understanding of the contract. If this is indeed the case, we would like to know the number of Michiganders who were billed such fees last year and how much they paid in total.
These user fees seem even more outlandish considering that JPMorgan Chase is already paid a hefty sum by the state to administer the program--roughly $800,000 so far. This fee is in addition to the swipe fees charged to vendors,as well as the interest earned on the large sum of money the state puts in the account. In fact, states such as California and Oregon have negotiated contracts where the swipe fees and interest pay for the program entirely with no additional funding supplied by the state or program participants. By adding unnecessary user fees into the mix, JPMorgan Chase has created a “triple pay” situation. It gets paid three times – user fees, state payments, and swipe fees. Such a policy may be good business for JPMorgan Chase, but it’s not good for the people of Michigan.
As you know, JPMorgan Chase was one of five banks that received federal bailout funding and it recently filed a settlement with a number of states, including Michigan, for practices resulting in increased home foreclosures. More recently, JPMorgan Chase lost over $2 billion by taking on excessive risk (again, after a taxpayer-funded bailout) and has sincedeclared that such a loss can easily be absorbed. Still we allow them to continue charging gratuitous fees toour citizens and to the state. Theunemployment debit card contract is yet another example of bad behavior by a giant bank which must be addressed.
If this information is consistent with your accounting, and if other states have indeed worked out agreements more beneficial to their consumers, then we request that the department immediately pursue a renegotiated contract that eliminates charges to the state and to the users, or put out a request for proposals that allows Michigan banks to compete.
As Governor Rick Snyder has called on state departments and others to follow best practices to produce a more effective state government, we are calling on the Department of Technology, Management and Budget and the Unemployment Insurance Agency to negotiate a better deal with JPMorgan Chase or another vendor to provide a better service to unemployed workers and taxpayers. We respectfully request a response on this issue by May 21, 2012.
Sincerely,
Signed by:
Representatives:
Timothy Bledsoe, 1Fred Durhal Jr., 6
Rashida Tlaib, 7
Phil Cavanagh, 8
Dian Slavens, 9
Jim Townsend, 10
Ellen Lipton, 11
Rudy Hobbs, 12
Vicki Barnett, 13
Jim Ananich, 14
Jeff Irwin, 15
Barb Byrum, 67
Brandon Dillion, 75
Stacy Erwin Oakes, 76
Senators:
Rebeckah Warren, 18
Steve Bieda, 9
CC:
Governor Rick Snyder
Mr. Steve Arwood