Last week, international investment bank JPMorgan Chase & Co. announced a $30 billion donation to address the ethnic wealth divide in the United States.
The money will fund four objectives: to expand affordable housing options for underprivileged communities, grow black and Latin-owned businesses, increase wealth and access to banking options among black and Latin communities, as well as increase diversity in the American workforce.
The bulk of the funding will go to the first of these objectives, with $8 billion being given to improve “key home lending products and offerings, including substantially increasing the Chase Homebuyer Grant in underserved communities,” $4 billion to refinancing loans for Black and Latin households, and $14 billion to finance as many as 100 thousand rental properties.
Furthermore, nearly $3 billion will go to providing loans and support for Black and Latin businesses, $50 million for Minority Depository Institutions and Community Development Financial Institutions, and $2 billion in philanthropic capital to “drive an inclusive economic recovery and support Black, Latinx and other underserved communities.”
Brian Lamb, who serves as the Global Head of Diversity and Inclusion at JPMorgan Chase, said the grant gained a new urgency during the coronavirus.
“We have a responsibility to intentionally drive economic inclusion for people that have been left behind,” Lamb said. “The COVID-19 crisis has exacerbated long-standing inequities for Black and Latin people around the world. We are using this catalytic moment to create change and economic opportunities that enhance racial equity for Black and Latin communities.”
While the long-term effects of JPMorgan Chase’s attempt to decrease the ethnic income gap are unknown, the effort addresses a significant problem.
The American income gap has remained steady since the 1970s, according to the Pew Research Center. While the median income for white Americans five decades ago was around $54,000, the median black income was only $30,000. Today, even as median incomes have grown with a similar trajectory, the gap remains. While the average median income for white Americans approaches $85,000, the median income for black Americans is only about $51,000.
This gap also extends to Latin people, the median income growth of which has lagged since 1970. The growth for Latinos in the 90th percentile saw income rise to about $75,000, less than the median white income.
Jamie Dimon, Chairman and CEO of JPMorgan Chase, said the donation was an important step toward closing this economic wealth gap.
“We can do more and do better to break down systems that have propagated racism and widespread economic inequality, especially for Black and Latin people,” he said. “It’s long past time that society addresses racial inequities in a more tangible, meaningful way.”
In 2016, Dimon declined the opportunity to become Treasury Secretary in the Trump administration. This decision cost Dimon as much as $70 million, but the company he leads has seen large scale success, growing to become the “world’s biggest investment bank by revenue.”
According to a report, the global financial services industry was valued at $22,219 billion in 2019 and is expected to reach about $26,521 billion by 2022.
In the previous fifteen years, JPMorgan Chase’s net worth has grown from around $120 billion to about $300 billion.
The bank has seen remarkable growth in spite of the pandemic, which analysts saw as unlikely due to market volatility. Revenue from Q3 2020 was largely in step with that of Q3 2019, and net income more than doubled from quarter to quarter, reaching $9.4 billion, or $2.92 per share, shattering analyst forecasts of $2.23 per share.
Analyst pessimism about JPMorgan Chase’s growth is largely due to financials being one of the hardest-hit segments of the pandemic economy. According to Forbes, the S&P 500, a key indicator of the sector’s health, fell “more than 17% year to date.”
"Despite significant uncertainty in the environment, the firm is unwavering in its commitment to drive an inclusive economic recovery, advance sustainable solutions to address climate change and improve the lives of our customers, especially those in underserved communities," said Dimon in a statement accompanying Q3 earnings.