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How federal food stamp program makes corporations hundreds of millions of dollars

Discussion in 'Politics' started by Tom Doyers, Oct 21, 2012.

  1. Tom Doyers

    Tom Doyers New Member

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    The author seems to play up the Obama angle but this is a non-partisan mechanism that will go on no matter who is in office...


    DAILY BEAST/GAI -- In 2010, President Obama signed into law the Healthy, Hunger-Free Kids Act. The bill added $4.5 billion to child-nutrition programs over the next decade, put in place nutrition standards for school lunch programs and vending machines, and implemented training for the cafeteria workers who feed 31 million students a day through the National School Lunch and School Breakfast programs. It received bipartisan support, and was hailed as a compassionate victory for America’s poorest children.

    The bill was also, however, a potentially good development for mega bank JP Morgan Chase. Why, you may be wondering, would one of the nation’s biggest banks benefit from a bill meant to feed poor children? A closer look at the legislation reveals the answer. The bill mandates that “all state agencies implement Electronic Benefit Transfer (EBT) systems by October 1, 2020†for those receiving money through the Women, Infants, and Children (WIC) program. And which company administers nearly half of all states’ EBT programs? You guessed it: JP Morgan Chase.

    We seldom think of poverty programs as profit centers, preferring to discuss them as matters of ideology. Liberals view programs like WIC—which provides food to both pregnant mothers and mothers of young children—as the mark of a compassionate nation. Conservatives see them as a gateway to government dependency.

    Arguably, they may fit either of those descriptions. But as with so many other government programs in Washington, both WIC and its close cousin, the federal food stamp program, have morphed into something else: cash cows for powerful corporate interests.

    At one point, food stamps were actual stamps: Those participating in the program handed retailers pieces of paper in exchange for goods. Today, the process has been digitized and the social stigma minimized. The 1996 welfare reform law required all states to implement debit-like cards, known as EBT cards, no later than October 1, 2002. EBT cards allow states to make Supplemental Nutrition Assistance Program (SNAP) benefits—the official name for the food stamp program—and direct cash assistance programs such as Temporary Assistance for Needy Families (TANF) accessible at retail locations in each state. (TANF benefits are also accessible through ATM machines.)

    According to the website of the Agriculture Department—which oversees the food stamp program—three companies administer the bulk of EBT card programs in 49 states (the state of Montana runs its own program) through multi-year contracts ranging from five to seven years. JP Morgan Electronic Financial Services, Inc. (a subsidiary of JP Morgan Chase), which entered the welfare market in 2004 by acquiring Citicorp Electronic Financial Services, has contracts with 24 states and two U.S. territories. Affiliated Computer Services (ACS), a subsidiary of Xerox, has 15 state contracts. And eFunds Corporation, a subsidiary of Fidelity National Information Services (not connected to Fidelity Investments), handles the EBT cards for 10 states and one U.S. territory.

    “This business is a very important business to JP Morgan,†Christopher Paton, the company’s managing director of treasury services, told Bloomberg News in 2011. “It’s an important business in terms of its size and scale. We also regard it as very important in the sense that we are delivering a very useful social function. We are a key part of this benefit delivery mechanism. Right now volumes have gone through the roof in the past couple of years or so … The good news from JP Morgan’s perspective is the infrastructure that we built has been able to cope with that increase in volume.â€

    Just how lucrative JP Morgan’s EBT state contracts are is hard to say, because total national data on EBT contracts are not reported. But thanks to a combination of public-records requests and contracts that are available online, here’s what we do know: 18 of the 24 states JP Morgan handles have been contracted to pay the bank up to $560,492,596.02 since 2004. Since 2007, Florida has been contracted to pay JP Morgan $90,351,202.22. Pennsylvania’s seven-year contract totaled $112,541,823.27. New York’s seven-year contract totaled $126,394,917.

    These contracts are transactional contracts, meaning they are amendable based on changes in program participation. Each month, the three companies that administer EBT receive a small fee that can range from $.31 to $2.30 (or higher depending upon the number of welfare services on an EBT card and state contractual requirements) for each SNAP recipient.

    EBT processors charge for other services as well. For example, any time TANF recipients withdraw their cash benefits or make balance inquiries through out-of-network ATM machines, the user may incur ATM transaction fees generally ranging from $.75 to $1.50. In addition, most states allow EBT processors to charge card replacement fees. Arizona cardholders, for example, are permitted one free replacement a year, after which a $5 per card fee is imposed. The same goes for customer service calls: After an EBT cardholder exceeds the state’s maximum number of free calls, EBT processors typically tack on a $.25 per call fee...

    MORE: http://www.thedailybeast.com/articles/2012/10/01/jp-morgan-s-food-stamp-empire.html
     
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  3. stripes

    stripes New Member VIP

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    gawd i love our gubment
     
  4. newcastlefan

    newcastlefan גֵּרְשֹׁם VIP

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    nice that they don't bother to report how much it costs the govt to clear paper food coupons, since they are basically paper checks. EBT saves the govt money over processing paper, cuts down on fraud, and saves trees. The Daily Beast's parent company (Newsweek) announced last week that they too are eliminating paper and will only produce electronic magazines. Strange how they see a problem with the fed saving money by eliminating paper processing, but its ok for themselves?

    I guess reporting all the facts would be too difficult?
     
  5. stripes

    stripes New Member VIP

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    libby pissed at media, thats rich
     

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