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Thu May 22, 2014
Jamie Dimon says $100 million investment in Detroit was not done for charity
For a lot of people, Jamie Dimon will forever be linked to the mortgage crisis that hit Detroit as hard as any city.
But there was no mention of that at yesterday's announcement, of course. Instead, there was a plated lunch - chicken and salad, with cupcakes - an uplifting video, and a standing ovation led by Michigan's governor, Rick Snyder.
The bulk of the $100 million-commitment from JPMorgan Chase will go to business loans, addressing blight and job training. And Jamie Dimon said, make no mistake, he doesn't consider this a charitable contribution.
"We are a, just to make it clear, a for-profit institution," Dimon said. "And we are making an investment in Detroit."
Money going to investment funds
$40 million will be targeted for two Detroit investment funds that are already lending money to city businesses, including Canine to Five, a dog day care owned by Liz Blondy.
Since she opened nine years ago, Blondy has received two loans worth about $150,000 from one of the two development funds that will share the JPMorgan Chase money. Now Blondy is ready to expand again and she says she's gone to traditional lenders.
"They're not interested in financing it because of the real estate values in the city of Detroit," she said.
But nonprofit lenders appear much more willing to take a risk on Detroit businesses like Blondy's. And she said it's those lenders that are going to drive redevelopment here.
Priming the pump for state investment?
Governor Snyder said this infusion of cash from JPMorgan Chase is another sign of Detroit's comeback. And he hopes it will help nudge along a deal to get the state to pony up for an aid package.
"This is a sign to show Detroit is coming back," Snyder said, "and to give more people confidence that by doing the settlement, it will only accelerate the comeback of the city, which helps all the State of Michigan."
Those bills cleared a first hurdle today, but there's still significant resistance, especially by Republicans fearing election-year retribution from a Tea Party-affiliated group funded by the Koch brothers.
And to be clear, the money Chase is spending here has nothing to do with that bankruptcy deal referred to as the Grand Bargain. That deal is intended to protect pensioners from steeper cuts and keep city-owned artworks off the auction block.
So why is JPMorgan Chase spreading cash around Motown?
Regulatory reform advocate Dennis Kelleher of the non-profit group Better Markets said JPMorgan may be trying to help their reputation enhancement by showing up for photo ops.
Kelleher wants people to remember that JPMorgan Chase helped create the economic wreckage in Detroit. It was fined $13 billion for its lending practices. And, he says, keep this in mind: It's a $2 trillion bank, and Dimon's compensation last year alone was more than $20 million.
"It's great that they're investing in Detroit, as they should have been doing all along," Kelleher said. "But $100 million from JPMorgan Chase is not even a drop in the bucket. It's probably the equivalent of about $10 to a regular person."
Or maybe it's like $10 to a person who's not just broke but deeply in debt and looking for any help he can get to get back on his feet.
Politics & Government