Estimating JP Morgan Chase's Profits from the Madoff Deposits

13 Pages Posted: 9 Apr 2012

See all articles by Louis R. Davis

Louis R. Davis

affiliation not provided to SSRN

Linus Wilson

University of Louisiana at Lafayette - College of Business Administration

Date Written: Spring 2011

Abstract

JP Morgan Chase had deposits from Bernard L. Madoff's investors totaling $5.5 billion at one point in 2008. The Chase account was supposedly where most of the funds in his Ponzi scheme were deposited. Any large deposit can be a considerable source of profit to a bank. Assuming that the deposits returned the bank's net interest margin and grew at a random geometric rate, this article estimates that JP Morgan Chase generated $435 million in after‐tax profits from this very large account over the course of 16 years. With JP Morgan Chase the target of pending lawsuits relating to the Madoff fraud, this article's methodology and results may be of interest to litigants, prosecutors, journalists, and academics.

Suggested Citation

Davis, Louis R. and Wilson, Linus, Estimating JP Morgan Chase's Profits from the Madoff Deposits (Spring 2011). Risk Management and Insurance Review, Vol. 14, Issue 1, pp. 107-119, 2011, Available at SSRN: https://ssrn.com/abstract=2036914 or http://dx.doi.org/10.1111/j.1540-6296.2011.01196.x

Louis R. Davis (Contact Author)

affiliation not provided to SSRN

No Address Available

Linus Wilson

University of Louisiana at Lafayette - College of Business Administration ( email )

Department of Economics & Finance
214 Hebrard Blvd., Room 326
Lafayette, LA 70504-0200
United States
(337) 482-6209 (Phone)
(337) 482-6675 (Fax)

HOME PAGE: http://www.linuswilson.com

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