JPMorgan Chase Pledges $30 Billion To Ease Racial Inequality, But Can Corporations Become Social Justice Warriors?

JPMorgan Chase (JPM) said on Thursday that it will spend up to $30 billion to advance racial equality by providing more services and opportunities to previously underserved Black and Latino communities.

Under the five-year program, designed to address the “racial wealth divide” and to “reduce systemic racism” against Black and Latinos, the megabank will provide loans, equity and direct funding, to promote and expand affordable housing and homeownership; and originate an additional 40,000 home purchase loans for Black and Latino households.

The bank will also expand its Chase Homebuyer Grant (a housing assistance program) in underserved communities; while helping another 20,000 Black and Latino households secure lower mortgage payments through refinancing loans.

JPMorgan Chase will also provide $14 billion in new loans, equity investments and other efforts to finance an additional 100,000 affordable rental units.

In order to develop more Black and Latino-owned small businesses, JPMorgan Chase will provide an additional 15,000 loans totaling $2 billion.

In addition, the bank said it seeks to help 1 million people open low-cost checking or savings accounts. As part of this plan, JPMorgan Chase will hire 150 new community managers and open 100 new branches in low-to-moderate income communities across the country.

JPMorgan Chase explained that “structural barriers” in the U.S. have created “profound racial inequalities” that have been “exacerbated” by the COVID-19 pandemic.

“Systemic racism is a tragic part of America’s history,” said Jamie Dimon, chairman and CEO of JPMorgan Chase. “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.”

Within the corporation itself, JPMorgan Chase wants to create a “more diverse and inclusive workforce” and hold managers accountable if they don’t meet diversity recruitment and promotion targets. JPMorgan Chase’s plans were praised by some civil rights organizations.

“I am heartened to see [JPMorgan Chase’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,” said Marc Morial, president of the National Urban League, in a statement.

According to the U.S. Census Bureau, the poverty rate for Blacks was 18.8% in 2019; and 15.7% for Hispanics – both historic lows. However, these two groups have suffered disproportionately during the COVID-19 pandemic this year.

JPMorgan Chase’s rivals Bank of America (BAC) and Citigroup (C) each earlier this year committed $1 billion to reduce inequality. Bank of America said in June it envisioned a four-year commitment to “help local communities address economic and racial inequality accelerated by a global pandemic.”

Bank of America’s action was apparently spurred by the late May killing of unarmed Black man George Floyd by a white police officer in Minnesota. Bank of America CEO Brian Moynihan referred to that incident and the protests that followed by saying: “The events of the past week have created a sense of true urgency that has arisen across our nation, particularly in view of the racial injustices we have seen in the communities where we work and live.”

Various other corporations of all sizes from across a string of industries – from eyeglass company Warby Parker to Walt Disney (DIS) – have made similar pledges to fight racism and inequality through various means at their disposal. However, JPMorgan Chase’s commitment appears to be one of the largest and most comprehensive.

However, some observers are skeptical that profit-driven corporations can do much to address complex issues as racial inequality when they must first serve their shareholders and the bottom line.

James Heskett of the Harvard Business School referred to the concept of “stakeholder capitalism” which asserts that a company should benefit everyone -- customers, employees, and local communities -- as well as shareholders. But Heskett cited a recent study financed by the Ford Foundation that looked at the corporate practices of more than 600 firms in the U.S. and Europe since the pandemic erupted. The study concluded that these companies have “failed to deliver fundamental shifts in corporate purpose in a moment of grave crisis when enlightened purpose should be paramount.”

Heskett wrote that it may be “unrealistic to place responsibility for such things as the rule of law, property rights, the environment, and the more equal distribution of wealth in the hands of those guiding for-profit public corporations. That’s the role of public servants.”