“Today” show host Matt Lauer looked genuinely incredulous Wednesday morning when he asked JPMorgan Chase CEO Jamie Dimon why his mega-bank had decided to invest $100 million in Detroit — as if that was more than a drop in the bucket for a bank boasting $18 billion in annual net income.
Wasn’t it too much of a roll of the dice for Dimon to invest so much money in a city mired with $18 billion of long-term debt, that lost a third of its population in recent decades, where 40 percent of the street lights and buses don’t work, and where 14 percent of the population was unemployed — nearly double the national average?
Was this a legitimate investment or merely a publicity stunt to detract attention from JPMorgan’s legion of legal problems and massive federal fines, Lauer asked.
“We’re doing this to grow investments, to grow the city and create a healthy and vibrant city,” Dimon coolly responded. “And if that happens, it’s good for us too. I also look at it as an American patriot. This is one of the few cities that hasn’t had a renaissance. Most other cities have. If it’s done right, they can have one here too.”
As for cynics who might view this deal as a way to distract attention from the big bank’s legal woes, Dimon replied: “The cynics would be wrong.”
JPMorgan Chase, the largest U.S. bank, reached a tentative agreement with the Justice Department late last fall to pay a record $13 billion to resolve allegations that it knowingly sold faulty mortgage securities that contributed to the financial crisis. If finalized, the deal would constitute the largest penalty ever paid by a single company.
The $100 million from JPMorgan Chase will be made available in the form of loans and grants. The funds will include $50 million in community development spending, $25 million for blight removal, $12.5 million for job training and placement and $7 million to boost small businesses, according to a summary posted today by JPMorgan Chase.
The bank has long-standing ties to Detroit. JPMorgan Chase has more than 2,500 employees in southeast Michigan.
"Obviously Detroit was having issues," Dimon told the Detroit Free Press. "I got together some of our senior people and said, what can we do that's really neat, that could be really creative."
Dimon is the latest white knight to come along to try to assist the once proud Motor City, which filed for Chapter 9 bankruptcy last July after Emergency Manager Kevyn Orr disclosed the city — with just over 700,000 residents — had accumulated that long term debt of $18 billion.
Last November, Michigan Gov. Rick Snyder and Goldman Sachs CEO Lloyd Blankfein announced a $20 million partnership to bring the investment bank’s 10,000 Small Businesses initiative to Detroit to help create jobs and economic growth. Small businesses would receive technical assistance and access to fresh capital under the plan.
Meanwhile, some of the city's most powerful leaders are attempting to forge a plan in which nonprofit philanthropic foundations put up $500 million to spin off the Detroit Institute of Art and its valuable collection of masterpieces, with the money going to reduce pension cuts and help rebuild city services.
Detroit Mayor Mike Duggan, who just recently took office and is working in tandem with the emergency manager, appeared on the “Today” show as well and described the deal formally unveiled today as “significant” and “a good jump start” for his city.
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