CHARLOTTE: JPMorgan Chase said Thursday it will extend billions in loans to Black and Latino homebuyers and small business owners in an expanded effort toward fixing what the bank calls “systemic racism” in the country’s economic system.
The New York bank said it is committing $30 billion over the next five years toward programs that include earmarking more money for getting Black and Latino families into homeownership and providing additional financing to build affordable rental housing units.
“Systemic racism is a tragic part of America’s history,” said JPMorgan Chase CEO Jamie Dimon in a statement. “We can do more and do better to break down systems that have propagated racism and widespread economic inequality.”
In the immediate aftermath of the police killing of George Floyd, JPMorgan announced a commitment of $1.75 billion toward programs they said would help address racial inequalities. But since then, as protests have remained constant in some urban centers, there has been a push for banks to do more.
Citigroup announced last month it is committing $1 billion toward closing “the racial wealth gap” in the United States, including $550 million toward homeownership programs for racial minorities.
JPMorgan, which has $3.2 trillion in assets, said it expects the $30 billion to help finance 40,000 additional mortgages for Black and Latino households, another 20,000 loans that will refinance mortgages and help construct 100,000 affordable rental units. Additional funds will go to finance 15,000 small business loans to Black and Latino-owned businesses.
There will also be programs to place 1 million customers in low-cost checking and savings accounts, partly by opening new branches in minority-majority neighborhoods.
Black households are several times more likely to be what is known as unbanked, meaning they do not have a primary checking account with a traditional bank, or underbanked, where households still rely on high-cost financial services like check cashing, pawn shops and payday loans.
American banking still has a long way to go to fix the problems of the past. Banks large and small are still regularly cited for discriminatory practices, including allegations of “redlining” Black homebuyers. Redlining is a practice in which banks deny or avoid providing credit services to consumers because of racial demographics or the neighborhood where they live.
Ed Golding, the executive director of the MIT Golub Center for Finance Policy, said JPMorgan’s investment is impressive but narrowing the gap requires more fundamental changes to the financial system. He noted that there’s a 30% gap between Black and white homeownership, amounting to about 4.5 million households. JPMorgan’s investment would go to a fraction of those.
“We are not going to do it overnight,” said Golding, who served as the head of the Federal Housing Administration under the Obama administration. “I applaud the energy and the direction but it’s going to take massive government policy changes to really move the needle and make up for hundreds of years of systemic racism.”
According to a recent study that Golding co-authored, African Americans on average pay higher mortgage interest payments, insurance premiums and property taxes than white families, adding an average of $67,320 to their homeownership costs. The study said Black families