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JPMorgan Chase pledges a massive $30B to fight the racial wealth gap

Snacks / Thursday, October 08, 2020

Outdoing everyone (10 times over)... Yesterday, JPMorgan Chase announced that it'll spend $30B over the next five years to help close the racial wealth gap. That's the biggest monetary commitment any company has made to advance racial equity by far.

  • ~$1B: How much Citi and Bank of America each pledged to racial equity causes since George Floyd's death in May.
  • $3.3B: How much the 100 largest US combined had pledged, including Citi, BoA, and 46 others (that was the biggest amount in history committed to these causes).
  • $30B: Chase's pledge makes up ~90% of the $33.5B committed by Fortune 100 companies since May.

Pull up the stats... In 2016, the net worth of a typical white family was ~10X greater than that of a typical Black family ($171K vs. $17K). The legacy of slavery, discrimination and the fact that Black families are more likely to be denied mortgages all contribute to this massive gap in generational wealth-building. So:

  • $14B: What Chase has earmarked for new housing loans to Black and Latino borrowers.
  • $8B: Dedicated to increasing affordable housing and homeownership in underserved communities.
  • $8B: The rest goes to mortgage refinancing, small biz lending, and philanthropy.

The purpose of the corporation has changed... For decades, public companies were all about returning value to shareholders through profits. Generally, more profit = more dividends and/or higher stock price. The $30B that Chase pledged to spend over the next 5 years represents ~83% of its total 2019 profit ($36B). But it might just be enough to change JPM’s image of "big bad corporation" into "big good corporation." That's strategic.

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