JPMorgan pledges $30 billion to boost diversity, Black, Latino home ownership, banking
JPMorgan Chase (JPM) on Thursday announced a five-year $ 30 billion initiative to tackle racial inequality in black and Hispanic communities.
The comprehensive initiative aims to strengthen home ownership, increase banking for underserved communities, provide capital to minority-owned companies and diversify the bank's workforce.
In total, the largest US bank is providing $ 26 billion for various housing initiatives, which make up the bulk of the bank's financial commitment. The sum is the largest ever committed by a single company and comes from the fact that the United States is being hit by social unrest and the aftermath of the coronavirus pandemic.
"Systemic racism is a tragic part of American history," said Jamie Dimon, chief executive of JPMorgan, in a statement.
“We can do more and better to dismantle systems that have spread racism and widespread economic inequality, especially for blacks and Latin Americans. It has been a long time since society addressed racial inequalities more tangibly and more meaningfully, ”added the CEO.
The move follows a similar initiative by Citi, which has pledged $ 1 billion for racial equality initiatives. Recently the bank released a report that found that systemic racism cost the US $ 16 trillion over the past two decades.
"We have a responsibility to purposely promote the economic inclusion of people who have been left behind," said Brian Lamb, JPMorgan's global head of diversity and inclusion, in a statement.
"The COVID-19 crisis has exacerbated long-standing inequalities for blacks and Latinx around the world," Lamb wrote. "We are seizing this catalytic moment to create change and economic opportunity that will improve racial justice for black and Latin American communities."
JPMorgan said a portion of its Advancing Black Pathways program will target 13 cities - including Detroit, New York, Houston, New Orleans, Los Angeles, Baltimore and Atlanta.
The company aims to increase home ownership for Blacks and Latinos by creating an additional 40,000 loans for home buyers while helping 20,000 households refinance their home loans and cut mortgage payments for thousands.
In addition, the bank plans to target affordable rental apartments by financing an additional 100,000 rental units.
Owning, renting is a "reality" for blacks and Latinos
A sale sign is seen near a home for sale in South Pasadena, California on April 24, 2020. - The coronavirus pandemic has exacerbated the US housing crisis as millions of unemployed now have to figure out how to pay their monthly mortgages. (Photo by Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN / AFP via Getty Images)
Low home ownership rates among minority households have long been a driver of increasing racial inequality in the country, particularly in cities like Chicago, where redlining was prevalent. Black households were denied access to land before the turn of the century. They were exposed to racist measures such as redlining, contract purchases and land devaluation.
"In Chicago, Chase doubled its grant to help homebuyers in black-majority communities to $ 5,000," the bank said.
"To help more current homeowners capitalize on historically low interest rates but cannot afford the cash needed to refinance, Chase is providing a $ 2,500 grant to customers who refinance using the company's DreaMaker product."
The bank's move has been welcomed by a number of grassroots and activist organizations, including the National Fair Housing Alliance and the National Urban League.
"JPMorgan Chase's new commitments will help owner or landlord more black and Latin American families whose access has been hampered by decades of systemic racism and who are now disproportionately affected by the effects of COVID-19," said Lisa Rice, CEO of the National Fair Housing Alliance, in a statement.
"Tackling the affordability crisis now obscured by the pandemic requires many actors on many fronts, and these commitments are concrete, meaningful steps in the right direction," she added.
The bank also seeks to raise capital for black and Hispanic owned companies. Studies have shown that race influences venture capital firm investment decisions. In total, around 35 trillion US dollars would be distributed differently if racist prejudice did not influence investment decisions.
As part of that commitment, the bank pledges to "provide an additional 15,000 loans to small businesses in most black and Latin American communities," JPMorgan said of $ 2 billion in loans.
JPMC says they will start a new program to help entrepreneurs with coaching, technical support and capital. It will also spend "an additional $ 750 million" on new and existing minority suppliers.
To address inequalities in access to financial services, JPMorgan Chase also plans to help 1 million people open their checking accounts. Traditionally, minorities pay more for access to banking services than their white counterparts.
JPMorgan recently announced to Yahoo Finance that its initiatives are not just public. The bank is also committed to increasing diversity within its own ranks and creating an "accountability framework" within the bank to hold managers accountable for their diversity track record.
To increase the number of Black and Hispanic employees in the bank's ranks, JPMC has committed to recruiting around 4,000 black students as interns and other entry-level positions. The company also plans to employ various people at the executive level.
Finding that educational inequalities lead to employment inequalities, JPMorgan addressed Yahoo Finance programs that support students at HBCUs with grants to cope with financial difficulties, as well as scholarships for hundreds of students.
Kristin Myers is a reporter for Yahoo Finance. Follow her on Twitter.
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