JPMorgan Chase, the largest bank in the United States, announced Thursday that it is pledging $30 billion over the next five years as part of a commitment to address deeply entrenched racial inequality, particularly in housing and business.
The multi-pronged plan, which dedicates billions of dollars in loans specifically for Black and Latinx households and entrepreneurs, builds on existing investments to help reduce a yawning racial wealth gap that has only gotten larger since the 1970s.
“Systemic racism is a tragic part of America’s history,” said Chief Executive Jamie Dimon. “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.”
To help tackle systemic racism, the banking giant is committing $8 billion alone to create 400,000 home purchase loans for Black and Latinx households. Another $4 billion will be dedicated to refinancing loans, which are expected to reduce mortgage payments for another 20,000 Black and Latinx homeowners.
But a significant feature of America’s wealth gap is that Latinx and Black people are far less likely to own their home than their white peers, and are overrepresented among those who are renting their homes. As part of the new plan, JP Morgan will finance 100,000 affordable rental units, providing $14 billion in new loans and investments for these homes.
The bank has also committed $2 billion to provide another 15,000 loans to small businesses in majority Black and Latinx neighborhoods.
The $30 billion is certainly an eyebrow-raising figure, though it’s important to note JP Morgan is one of the few companies in the world capable of making such a pledge. Ranked by S&P Global as the seventh-largest banking firm in the world, JP Morgan’s total assets are estimated to be around $3.23 trillion. The firm’s $30 billion commitment to racial inequality represents just 0.93 percent of that number.
Still, JP Morgan’s plan could prove to be a gamechanger for many middle and low-income Black and Latinx Americans, particularly those who have been attempting to stay in safe, affordable housing throughout the coronavirus pandemic and a recession.
“All Americans deserve equitable access to affordable housing and the physical, emotional and financial security it represents,” Lisa Rice, CEO of National Fair Housing Alliance said about the new plan. “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.”
JP Morgan’s new plan builds on similar efforts toward addressing racial inequality. In 2019, the bank promised to help fuel Detroit’s economic recovery by pledging $200 million toward revitalization efforts, with most of that money earmarked for Black entrepreneurs and homeowners.
But the firm has also been the target of allegations of discrimination and racism from its clients and employees. In December 2019, JP Morgan asked staff across the company to come forward with experiences and concerns related to racism after a New York Times report alleged that employees at an Arizona Chase bank denied services to Black clients. The report came just over a year after Chase paid out a major settlement in a racial discrimination lawsuit filed by Black current and former employees. About $20 million of that went directly to the plaintiffs, who alleged discrimination at the company that was “uniform and national in scope,” reports Bloomberg.
Earlier this year, the firm announced a new policy that would allow the bank to cut ties with customers who were racially abusive to its staff. Part of JP Morgan’s latest plan is also to create a stronger presence in minority communities that have historically been divested from. The bank pledges to hire 150 community managers and open new branches in underserved areas, including Crenshaw in Los Angeles, Southeast Washington D.C., and Corktown in Detroit.