Banking giant awaits $2b windfall payout

JPMorgan Chase, the retail and investment banking giant, is in line for a US$1.4 billion ($2 billion) windfall from the US taxpayer, as a result of a little-noticed provision in an economic stimulus bill that went through Congress last year.

The bank, which posted a profit of almost US$12 billion for 2009, is believed to be close to a deal with regulators that will unlock a tax perk given to businesses in a law passed last November.

The legislation excluded banks that received bailout money but JPMorgan says it is entitled to the money via a subsidiary, Washington Mutual.

Other big recipients have included house builders and retailers.

Under the tax break, companies could offset five years of profits against their losses of 2008 and 2009, instead of just the usual two.

That means the biggest benefits go to those with the biggest crisis-time losses.

JPMorgan bought WaMu's banking business as it teetered on the brink of collapse in 2008.

The bankrupt rump of WaMu has claimed a US$2.6 billion tax break and JPMorgan agreed with creditors that it could have a little over half of that.

- INDEPENDENT