One day after Governor Pat Quinn signed a taxpayer-funded subsidy of $77 million annually to the wildly profitable Chicago Mercantile Exchange Group -- and seven days before Christmas -- the CME Group's charitable arm pulled the plug on its charitable giving in Illinois.
And the move has left some Illinois lawmakers gobsmacked.
Despite profits of $826 million in 2010 and having $749 million of cash-on-hand as of June 30, 2011, the CME Group claimed the collapse of the MF Global Holdings required the Chicago-based exchange operator to pay MF customers $50 million and, thus, to suspend its charitable giving to local school groups, which totaled six million dollars last year.
"All new CME Group Foundation grant proposals will be put on hold until further notice," the foundation posted on its website. "We apologize for any inconvenience this may cause grant applicants."
In other words, Illinois, tough.
The exchange, which had profits of $316 million in the 3rd quarter of 2011, or an increase of 29 percent over 3rd quarter 2010, also expects to rake in an additional $30 or $40 million in 2012 from new co-location service fees according to Chief Financial Officer Jamie Parisi.
"We are extremely pleased with both our top- and bottom-line results, which highlight the operating leverage inherent in our business model," said CME Group Chief Executive Officer Craig Donohue.
The "operating leverage" in CME's prized business model used by CME Executive Chairman Terrence Duffy was powerful enough to bully the Illinois General Assembly into coughing up the $77 million annually under the threat of moving its operation outside of Illinois.
But when it came to charitable giving, the vaunted "operating leverage" of its model stalled. It can't manage $6 million -- a rounding error for CME -- for charity.
In lobbying Illinois lawmakers for tax breaks, CME cited its charitable giving to lawmakers as a talking point in their favor. It was clearly a misleading talking point.
"When I was getting pushed to support their tax break, they made a point of talking about how much they give locally. Unreal. As if I needed another reason to be proud of my NO vote," State Rep. Kelly Cassidy (D-Chicago) posted on her Facebook page.
"I heard the same from CME. And as for the timing of the announcement? I am at a loss for words... or at least words I would be willing to post on Facebook," State Rep. Ann Williams posted in Facebook in response to Cassidy's comments.
CME's elimination of its charitable giving to local school groups also provoked the ire of State Rep. Greg Harris (D-Chicago).
"...[F]urious that CME Group announced they are eliminating charitable giving, just one day after getting their $90 million per year tax breaks. I'm sure they hoped no one would notice their weekend release," Harris posted on his Facebook page.
"One day after their tax break is approved, CME wishes Joys of the Season to the People of Illinois," Harris added.
Yeah, a Bronx Holiday Cheer.
Merry Christmas from the 1 percent.
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CME Curtails Charitable Giving After MF Global Collapse | Stock ...
So it may be for the best.
Traders are the lowest form of life.
Just hit the LaSalle Street area bars after work if you don't believe me.
Stop trying to keep big companies in Illinois. Let them move to Red States where the poor are deemed as a nuisance and as lower life forms.
Ditch the tax breaks for big companies and pass tax breaks for small businesses and entrepreneurs. Let new thinkers fill up all the empty storefronts and office spaces. I guarantee when those people are dominating the Illinois economy, then companies like Sears, CAT, or the CME won't have any sway on these matters.
Regards,
The voters
I guess during the holiday season I should be more empathetic. I should realize that our society no longer has much of a need for those males of a simpler utility, but 'chicken little', really? There are so many more nuances and greater implications to this story that further reactions would only hinder the value discourse. CME set up a trust for customers who may get cheated in a scandal like the recent MF Global scandal. This fund was given to charity in the absence of any such scandal. Instead of writing a story on the effects of the MF Global scandal on charity, you chose to try and blemish a charity giving company who did their due diligence on a corrupt state's tax code.
CME was a party of the MF Global scandal.
But nice spin.
I guess the facts don't always make for a good story because in this case quite a few are missing.
For example, the CME is not receiving a subsidy from the state. In fact it pays nearly 6 percent of all
of the state's total corporate income taxes. Now they will still pay taxes but at a more reasonable rate.
As for the charitable giving, CME in the past used funds from a trust which was set up long ago to
help customers who suffered losses from a company going bankrupt. There were excess funds for charity because none lost money due to this type of bankruptcy in over 70 years, that is until MF Global, in my opinion, stole this money.
The entire mess has had a severe impact on thousands of Innocent people around the world. The culprit is not CME but MF Global.
Facts. You want facts, Sir? CME's tax cut is being is being financed and subsidized by those state vendors whose bills will go unpaid even longer and by those whose state income tax refunds will go unpaid even longer. With $746 million of cash in its other pocket, CME obviously could continued its education charity program. And "reasonable" for you is a special tax cut achieved by blackmailing the state under the threat of leaving. Those are facts.
Thanks for reading.
And they can't support that because they failed to properly regulate one of their own customers?
Wow.