Bankers will have to spend a lot more to make up for 2008
Jamie Dimon is the Chairman and CEO of JPMorgan Chase, the largest bank in America. Back in June, at the height of the BLM protests, he was photographed ‘taking a knee’ in one of his branches.
Just the sort of virtue signalling we’ve come to expect from our woke corporations? A lot of people thought so at the time, including me.
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However, JPMorgan Chase has now unveiled a “$30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.”
Even for a major bank, that’s a colossal sum. As my colleague Ed West points out, it’s roughly a quarter of what the Marshall Plan cost (in today’s money). Certainly, it makes other corporate pledges this year look puny by comparison.
Just to be clear though, JPMorgan Chase isn’t giving all this money away. In fact, most of it is being made in the form of loans and equity investments. The aim is to boost the access that “Black and Latinx” communities have to mortgages, affordable rented property, business loans and philanthropic capital.
Obviously, to have any meaning, this money needs to be over-and-above what would have been invested in the normal course of events. So let’s wait for an independent audit before getting too carried away. Or, as a spoof vox pop from The Onion sarcastically puts it, “this pledge is so generous that I see no need to ever check back if it actually happens.”
Nevertheless, there’s something to be said for corporates who use their core strengths to make a difference, as opposed to superficial gestures. For instance, in this country, supermarkets could commit to addressing health inequalities by radically reducing the amount of junk food they sell to the public. How about it, Sainsbury’s?
Financial inclusion is an obvious objective for banks to put their weight behind — especially in America’s notoriously segregated housing sector.
That said, it’s vital that they don’t recreate the conditions that led to the subprime mortgage bubble that did so much harm to the poorest communities. In fact, the entire finance industry needs to rethink everything it has done to inflate house prices around the world. By pumping cheap credit into property as an investment product, they’ve put homeownership beyond the reach of the young and the marginalised. Furthermore, in the process of inflating asset prices, they’ve made already wealthy groups — including themselves — yet wealthier.
$30 billion, even if wisely allocated, doesn’t begin to make up for what the bankers have done to increase inequality, tank economic growth and discredit capitalism.