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CHARLOTTE: JPMorgan Chase said Thursday (Friday in Manila) that it will make billions in loans to Black and Latino homebuyers and small business owners in an expanded effort to correct what the bank calls “systemic racism” in the economic system. from the country.
The New York bank said it is committing $ 30 billion over the next five years to
programs that include earmarking more money for Black and Latino families to own homes and providing additional financing to build affordable rental housing units.
“Systemic racism is a tragic part of America’s history,” JPMorgan Chase CEO Jamie Dimon said in a statement. “We can do more and do better to end the systems that have spread racism and widespread economic inequality.”
In the immediate aftermath of the George Floyd police murder, JPMorgan announced a $ 1.75 billion commitment for programs they said would help address racial inequalities. But since then, as protests have been constant in some urban centers, there has been a push for banks to do more.
Citigroup announced last month that it is committing $ 1 billion to close “the racial wealth gap” in the United States, including $ 550 million for racial minority homeownership programs.
JPMorgan, which has $ 3.2 trillion in assets, said it expects the $ 30 billion to help finance an additional 40,000 mortgages for black and Latino households, another 20,000 loans that will refinance mortgages and help build 100,000 affordable rental units.
The additional funds will go towards financing 15,000 small business loans to black and Latino owned businesses.
There will also be programs to place 1 million customers in low-cost checking and savings accounts, in part by opening new branches in majority-minority neighborhoods.
Black households are several times more likely to be what is known as unbanked, meaning they do not have a main current account at a traditional bank, or are unbanked, where households still depend on high-end financial services cost such as check cashing, pawn shops and payday loans.
American banking still has a long way to go in solving the problems of the past. Banks large and small are still regularly cited for discriminatory practices, including accusations of “putting the red line” on black home buyers.
The red line is a practice in which banks deny or avoid providing credit services to consumers due to racial demographics or the neighborhood where they live.
Ed Golding, executive director of the MIT Golub Center for Finance Policy, said JPMorgan’s investment is impressive, but closing the gap requires more fundamental changes to the financial system.
He noted that there is a 30 percent gap between black and white home ownership, amounting to about 4.5 million households. JPMorgan’s investment would go to a fraction of those.
“We won’t do it overnight,” said Golding, who served as head of the Federal Housing Administration under the Obama administration.
“I applaud the energy and direction, but it will take massive changes in government policy to really move the needle and offset the hundreds of years of systemic racism.”
According to a recent study that Golding co-authored, African-Americans pay on average higher mortgage interest payments, insurance premiums, and property taxes than white families, adding an average of $ 67,320 to home ownership costs. living place.
The study said that black families are disadvantaged by a risk-based pricing system, which charges higher mortgage rates for down payments and lower credit scores. Golding called for a system that shared risk among borrowers.
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