JPMorgan Chase CEO Jamie Dimon speaks at the North America’s Building Trades Unions (NABTU) 2019 legislative conference in Washington, April 9, 2019.
Jeenah Moon | Reuters
JPMorgan Chase is making a $30 billion commitment it says will help address U.S. wealth inequality, especially in traditionally underserved Black and Latino communities.
The bank’s pledge is a combination of loans, investments and philanthropy over five years that it says goes beyond what it would do in the normal course of business. The goal, according to the firm’s press release: To “drive an inclusive economic recovery, support employees and break down barriers of systemic racism.”
Questions about racial inequality in the U.S. were triggered after the May 25 death of George Floyd at the hands of a police officer sparked weeks of protests across the country. The coronavirus pandemic also exposed the gap in circumstances and health outcomes faced by the Black community in particular, resulting in a far higher Covid-19 mortality rate than in the overall population.
“Systemic racism is a tragic part of America’s history,” said Jamie Dimon, CEO of JPMorgan, in a statement. “We can do more and do better to break down systems that have propagated racism and widespread economic inequality, especially for Black and Latinx people. It’s long past time that society addresses racial inequities in a more tangible, meaningful way.”
Banks, which historically have contributed to inequality through now-banned practices including redlining, are hoping to be part of the solution to society’s problems. Earlier, Bank of America and Citigroup each made $1 billion commitments to reduce inequality.
The great bulk of JPMorgan’s dollar commitment is tied to housing. The New York-based bank says it will provide $14 billion in loans and investments to spur the creation of 100,000 affordable rental units in underserved communities.
The bank will also originate 40,000 home purchase loans for Black and Latino households, adding $8 billion worth of mortgages to its commitment. It will also help another 20,000 Black and Latino customers lower their mortgage payments with $4 billion in refinancings. That effort will include grants for down payments and closing costs, the bank said.
The bank said that the $12 billion in additional mortgages is calculated based on the firm’s 2019 mortgage volume for minority communities, using that as a default rate for loans it would’ve made over the next five years.
JPMorgan said it would also provide 15,000 loans worth $2 billion to small businesses in Black and Latino neighborhoods and launch a new program to help coach entrepreneurs. It will also spend an additional $750 million with Black and Latino suppliers.
“I am heartened to see JPMorgan’s specific, measurable commitments that we believe will address decades of systemic racism toward Black communities – and will bolster the well-being of families across the country, as well as our collective economy,” Marc Morial, president of the National Urban League, said in a statement.
JPMorgan also said it would give 1 million people in underserved areas access to low-cost bank accounts, in part by opening branches in low-to-moderate income communities.
With regard to its own workforce of 256,710, the bank said it would hold managers accountable for diversity targets by incorporating goals into compensation decisions.
Finally, the bank is providing $2 billion in philanthropy, extending and expanding a previous $1.75 billion, five-year pledge made in 2018.