JPMorgan Chase Makes $30 Billion Commitment to Help Close The Racial Wealth Gap
Applying a mix of loans, investments, and philanthropy, JPMorgan Chase is committing $30 billion over five years to help Black and Latinx Americans develop wealth, buy homes, and grow businesses.
The nation’s largest bank’s fresh pledge aims to promote racial equity. It reports structural barriers in America have created racial inequalities exacerbated by COVID-19. Building on its existing investments, the firm says its new pledge will drive an inclusive economic recovery and help end systemic racism.
“Systemic racism is a tragic part of America’s history,” Jamie Dimon, chairman and CEO, JPMorgan Chase & Co., stated in a news release. “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.”
JPMorgan Chase joins other large U.S. banks making major financial commitments this year to battle racism after the police shooting of George Floyd and Black Lives Matter protests.
Some commitments are from Bank of America, Citi, and PNC Financial Services Group, all with pledges of $1 billion or more. Yet, the pledge by JPMorgan Chase is the largest such promise thus far.
William Michael Cunningham, an economist and banking expert, says data from his firm, Creative Investment Research, shows that the total dollar amount of BLM pledges this year has grown from $1.6 billion to $10 billion. With the Chase pledge, he claims the total is now $40 billion.
“When looking at these pledges, we like to evaluate these pledges based on IMM – Innovation, Money, Momentum. This pledge meets two of our criteria: it is a sizable dollar amount, and it helps continue the momentum that has been established. The question is how innovative it is. Two out of three is not bad.”
Much of JPMorgan Chase’s efforts will be supplying housing and homeownership in underserved areas. It plans to originate an additional 40,000 home purchase loans for Black and Latinx households. Committing $8 billion in mortgages to do that, the firm’s efforts will include improving key home lending products and offerings. That includes greatly boosting the Chase Homebuyer Grant in the communities.
Further, it will help an additional 20,000 Black and Latinx households achieve lower mortgage payments through refinancing loans. It is committing up to $4 billion in refinancing loans to do that. Further, the firms plan to finance an additional 100,000 affordable rental units. To do this, it will provide $14 billion in new loans, equity investments, and other efforts to expand affordable housing in underserved communities.
“All Americans deserve equitable access to affordable housing and the physical, emotional and financial security it represents,” stated Lisa Rice, CEO, National Fair Housing Alliance. “JPMorgan Chase’s new commitments will help make owning or renting a reality for more Black and Latinx families, whose housing access has been impeded by decades of systemic racism and are now disproportionately affected by the impact of COVID-19. Addressing the affordability crisis, now overlaid with the pandemic, will require many players on many fronts, and these commitments are concrete, meaningful steps in the right direction.”
Entrepreneurially, JPMorgan Chase reports it will provide 15,000 loans for up to $2 billion to small businesses in Black and Latino neighborhoods. Other plans call for starting a new program to help coach entrepreneurs. And the funding is needed. The bank reports Black people represent nearly 13% of the U.S. population, but only 4% of the country’s small business owners. JPMorgan Chase also promises to spend an extra $750 million with Black and Latino suppliers.
Marc Morial, president and CEO of the National Urban League, stated, “America’s racial wealth gap has been a persistent injustice, and it can no longer be tolerated as business as usual. 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 wellbeing of families across the country, as well as our collective economy. We are proud to work alongside JPMorgan Chase to make these changes and help craft conditions for lasting racial equity.”
Other moves by the banking giant will include helping 1 million people open low-cost checking or savings accounts. To do that, the firm pledges hiring 150 new community managers, opening new branches in underserved communities. It also plans to spend more on marketing to reach more customers who are now underserved, unbanked, or underbanked. JPMorgan Chase plans to invest up to $50 million in capital and deposits in Black and Latinx-led Minority Depository Institutions (MDI) and Community Development Financial Institutions (CDFI), and provide mentoring to some of those firms to help them succeed.
Helping to empower communities, the firm is providing $2 billion in philanthropy. That will expand a previous $1.75 billion five-year pledge made in 2018.
For employees, JPMorgan Chase reports it will hold executives accountable by incorporating diversity and inclusion priorities and progress into year-end performance evaluations and compensation decisions.
Additional details on the firm’s commitment are here.