June 21, 2021: Letter to Mr. Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase & Co.

June 21, 2021

Mr. Jamie Dimon

Chairman and Chief Executive Officer

JPMorgan Chase & Co.

270 Park Avenue

New York, NY 10005

Dear Mr. Dimon:

We write to request information from JPMorgan Chase & Co. (JPMC) regarding its lending policies for oil and gas clients, including client banks with significant oil and gas exposures. As the second-largest financier of fracking in the United States, JPMC is well aware that oil and gas production relies on debt financing and that the market is prone to sudden downturns. We seek to find out why JPMC lobbied for government relief in the coronavirus relief legislation for oil and gas companies and client banks overexposed to oil and gas.1

JPMC is the biggest banker for the oil and gas industry worldwide, financing $51.3 billion in fossil fuel projects in 2020 and providing nearly $317 billion in lending and underwriting for the industry between 2016 and 2020.2 It is the lender of choice for the U.S. fracking industry, for which it provided one-sixth of all financing between 2016 and 2020, totaling $37.8 billion.3 This is in addition to lending to regional banks that also have significant oil and gas portfolios and are relatively vulnerable to energy sector shocks.4

JPMC is familiar with the risks of financing oil and gas production. Of all the bonds issued by U.S. fracking companies between 2016 and 2020, 72% were considered non- investment grade, compared to 30% in the wider energy sector and 17% in the U.S. economy as a whole.5 During the last downturn in oil prices in 2015 and 2016, JPMC lost $8.7 billion in

1. JPMorgan Secretly Emailed the Trump Administration About Bailing Out the Oil Industry, Mother Jones (Apr. 7, 2021) (online at www.motherjones.com/environment/2021/04/jpmorgan-secretly-emailed-the-trump- administration-about-bailing-out-the-oil-industry).
2. Rainforest Action Network, Banking on Climate Chaos: Fossil Fuel Finance Report 2021 (Mar. 2021) (online at www.ran.org/wp-content/uploads/2021/03/Banking-on-Climate-Chaos-2021.pdf).
3. Rainforest Action Network, Fracking Fiasco: The Banks That Fueled the U.S. Shale Bust (Sept. 2020) (online at www.ran.org/wp-content/uploads/2020/09/RAN_OCI_Fracking_Fiasco.pdf).
4. Oil Crash Is Bad News for Regional Banks That Went Big on Energy, Wall Street Journal (Mar. 16, 2020) (online at www.wsj.com/articles/oil-crash-is-bad-news-for-regional-banks-that-went-big-on-energy-11584352803).
5. Rainforest Action Network, Fracking Fiasco: The Banks that Fueled the U.S. Shale Bust (Sept. 2020) (online at www.ran.org/wp-content/uploads/2020/09/RAN_OCI_Fracking_Fiasco.pdf).

Mr. Jamie Dimon

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market capitalization over two days.6 Asked at the time if this would lead to a change in business practices, you said, "To the extent we can responsibly support clients, we're going to. And if we lose a little bit more money because of it, so be it."7

We are concerned that JPMC's lending practices are putting U.S. taxpayer funds at risk. In March 2020, the coronavirus pandemic and price cuts in the international market sent oil prices crashing. The crisis was so severe that major U.S. banks, including JPMC, considered the drastic step of assuming operational control of wells from bankrupt companies.8 Meanwhile, analysts predicted losses of up to 60% for regional banks with significant oil and gas portfolios.9 Shortly thereafter, JPMC presented senior Treasury Department officials with proposed options to "direct government support to the energy sector," citing "numerous banks, largely scattered across the South, [with] meaningful direct exposure to oil and gas."10 JPMC suggested that Treasury follow the "ample precedent of financial sponsors supporting banks during the Global Financial Crisis," including that it "directly purchase troubled [oil and gas] assets."11 Meanwhile, roughly one-quarter of Americans-and nearly half of mothers with children 12 or younger-were going hungry because of the coronavirus crisis.12

In addition to destabilizing markets, reckless lending to oil and gas companies creates billions of dollars in environmental cleanup costs, which are often passed on to taxpayers. For example, abandoned wells from defunct oil and gas companies emit greenhouse gases and contaminate local air and water. The Environmental Protection Agency (EPA) estimates that there are over three million abandoned oil and gas wells across the U.S., of which more than two million are "unplugged" and leaking methane into the atmosphere.13 In 2018, these wells accounted for greenhouse gas emissions equivalent to 1.5 million cars.14 Though federal and state laws require oil and gas producers to pay a bond to cover the cost of cleanup in the event of

1. J.P. Morgan Has Lost $8.7 Billion in Value Over the Last Two Days, Fortune (Feb. 24, 2016) (online athttps://fortune.com/2016/02/24/jp-morgan-stock-drop).
2. Big Banks Brace for Oil Loans to Implode, CNN Business (Jan. 18, 2016) (online at https://money.cnn.com/2016/01/18/investing/oil-crash-wall-street-banks-jpmorgan).
3. Exclusive: U.S. Banks Prepare to Seize Energy Assets as Shale Boom Goes Bust, Reuters (Apr. 9, 2020) (online at www.reuters.com/article/us-usa-banks-energy-assets-exclusive-idUSKCN21R3JI).
4. Oil Crash Is Bad News for Regional Banks That Went Big on Energy, Wall Street Journal (Mar. 16, 2020) (online at www.wsj.com/articles/oil-crash-is-bad-news-for-regional-banks-that-went-big-on-energy-11584352803).
5. JPMorgan Secretly Emailed the Trump Administration About Bailing Out the Oil Industry, Mother Jones (Apr. 7, 2021) (online at www.motherjones.com/environment/2021/04/jpmorgan-secretly-emailed-the-trump- administration-about-bailing-out-the-oil-industry).
6. Id.
7. The COVID-19 Crisis Has Already Left Too Many Children Hungry in America, Brookings Institution (May 6, 2020) (online at www.brookings.edu/blog/up-front/2020/05/06/the-covid-19-crisis-has-already-left-too- many-children-hungry-in-america).
8. Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990-2016: Abandoned Oil and Gas Wells (Apr. 2018) (online at www.epa.gov/sites/production/files/2018- 04/documents/ghgemissions_abandoned_wells.pdf).
9. 'Orphaned' Oil Wells to Squeeze State Coffers, Politico (May 12, 2020) (online at www.politico.com/news/2020/05/11/orphaned-oil-wells-to-squeeze-state-coffers-249138).

Mr. Jamie Dimon

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default, these bonds are almost always inadequate. In California alone, the estimated cost of plugging orphan wells is ten times greater than the available bonds, without factoring in the costs of environmental remediation.15

This crisis is accelerating, with nearly 200 U.S. oil and gas companies predicted to go bankrupt between 2020 and 2022.16 Congress must have confidence that JPMC will not make taxpayers responsible for the bank's high-risk investment in the oil and gas industry. To assist the Subcommittee on Environment's oversight of the risks to taxpayers posed by the lending practices to the oil and gas industry by banks that are too big to fail, please provide the following by no later than July 6, 2021:

1. All documents and communications between March 2020 and September 2020 estimating or analyzing the number of JPMC oil and gas clients, including client banks with "meaningful direct exposure to oil and gas," that went bankrupt, were predicted to go bankrupt, and/or were expected to go bankrupt without federal assistance;
2. All documents and communications since January 2016 estimating the potential cost of environmental remediation of orphaned wells owned or operated by JPMC oil and gas industry clients;
3. All documents and communications since January 2016 estimating the potential cost of environmental remediation of orphan wells owned or operated by debtors of JPMC client banks with "meaningful direct exposure to oil and gas";
4. All documents relating to JPMC customs or practices in lending or underwriting agreements with oil and gas companies since January 2016, including covenants to cover the cost of environmental liabilities, in cases where JPMC believes that existing federal or state regulations may be insufficient to cover likely remediation costs;
5. The amount of debt held by JPMC in oil and gas companies as of January 1, 2020;
6. The total amount of JPMC's lending, underwriting, and market making for the oil and gas industry between Q1 2017 and Q4 2019, in aggregate and respectively by quarter and category;

1. California Council on Science and Technology, Orphan Wells in California: An Initial Assessment of the State's Potential Liabilities to Plug and Decommission Orphan Oil and Gas Wells (Nov. 2018) (online athttps://ccst.us/wp-content/uploads/CCST-Orphan-Wells-in-California-An-Initial-Assessment.pdf).
2. Rystad Energy, Press Release: Even at $40 WTI, About 150 More North American E&Ps Will Need Chapter 11 Protection by End-2022(online at www.rystadenergy.com/newsevents/news/press-releases/even-at- %2440wti-about-150-more-north-american-eps-will-need-chapter-11-protection-by-end-2022).

Mr. Jamie Dimon

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1. The amount of JPMC's total counterparty exposure to client banks with "meaningful direct exposure to oil and gas (generally ranging from ~3-11% of total loans)" between Q1 2017 and Q4 2019;17
2. JPMC's revenue from oil and gas industry business between Q1 2017 and Q4 2019, including from client banks with "meaningful direct exposure to oil and gas." Please provide revenue in aggregate, and from each of the following sources, described in JPMC's annual report:
3. 1. investment banking fees;
   2. principal transactions revenues;
   3. lending- and deposit-related fees;
   4. asset management, administration, and commissions;
   5. investment securities gains;
   6. card income;
   7. interest income; and
   8. other income;18
4. How JPMC mitigates the threat of future volatility associated with high concentrations of loans to oil and gas companies;
5. How JPMC mitigates the risk posed by regional banks' exposure to oil and gas identified in the April 2020 memo to Treasury; and
6. The basis for JPMCs suggestion to Treasury for a "TARP-like program of government equity injection into community banks."19

The Committee on Oversight and Reform is the principal oversight committee of the House of Representatives and has broad authority to investigate "any matter" at "any time" under

1. JPMorgan Secretly Emailed the Trump Administration About Bailing Out the Oil Industry, Mother Jones (Apr. 7, 2021) (online at www.motherjones.com/environment/2021/04/jpmorgan-secretly-emailed-the-trump- administration-about-bailing-out-the-oil-industry).
2. JPMorgan Chase & Co., 2020 Annual Report (Apr. 2021) (online at www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/annualreport- 2020.pdf).
3. JPMorgan Secretly Emailed the Trump Administration About Bailing Out the Oil Industry, Mother Jones (Apr. 7, 2021) (online at www.motherjones.com/environment/2021/04/jpmorgan-secretly-emailed-the-trump- administration-about-bailing-out-the-oil-industry).

Mr. Jamie Dimon

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House Rule X. An attachment to this letter provides additional instructions for responding to this request. Please contact Committee staff at [phone] with any questions. Thank you for your prompt attention to this matter.

	Sincerely,
_________________________	_________________________
Ro Khanna	Katie Porter
Chair	Chair
Subcommittee on Environment	Oversight and Investigations
Committee on Oversight and Reform	Subcommittee
	Committee on Natural Resources
Enclosure

1. The Honorable Ralph Norman, Ranking Member Subcommittee on Environment
   Committee on Oversight and Reform
   The Honorable Paul Gosar, Ranking Member Oversight and Investigations Subcommittee Committee on Natural Resources