No, JPMorgan Isn’t Helping Detroit Out Of The Goodness of Its Heart

JPMorgan Chase enjoyed an awful lot of glowing praise and positive PR yesterday with the announcement of the firm’s intention to invest $100 million in revitalizing Detroit. CEO Jaime Dimon headed to Detroit for his victory lap, and even brought along a glossy brochure of all the wonderful ways JPMorgan will save Detroit.

There has been virtually zero critical reporting of the move. On closer inspection, though, a few things stand out.

For one thing, $100 million dollars over a 5 year period is pocket change for a company bringing in $18 to 22 billion annually. Heck, over 5 years, that $100 million may not even rival Mr. Dimon’s take-home pay. Moreover, the majority of this “investment” will be in the form of loans, not out-right grants – so they’ll be recouping that money, with interest.

And honestly, what’s the great risk here for JPMorgan? The Governor and Republicans in the Michigan state legislature  have conspired to force Detroit into bankruptcy; and if things work out as planned, public workers will foot the bill, while public services and assets will be privatized and snapped up by eager billionaires. The entire city is at rock-bottom prices, not to mention practically empty. If you’re looking for a city with seriously nowhere to go but up, Detroit’s your spot.

A comprehensive analysis by Demos  found that Detroit’s financial insolvency was mainly due to a severe decline in revenue (a good chunk of which was due to moves by the Republican-held state legislature) and was “exacerbated by complicated Wall Street deals that put its ability to pay its expenses at greater risk.”  So, naturally, Wall Street can now ride to the rescue?

But the thing that stinks the most is not that JPMorgan gets to wrap itself in “social conscience” for a pittance. It’s this:

The Justice Dept. urged a federal judge to quash a lawsuit that seeks to overturn its $13 bil settlement with JPMorgan Chase . Nonprofit Better Markets sued in Feb., saying that the deal was too favorable to the bank and was a blanket civil immunity. In the filing Mon., Justice said that the group lacked standing to sue. Separately, JPMorgan said it plans to pump $100 mil into bankrupt Detroit over 5 years via loans and grants, including funds for home mortgages, job training and blight removal. 

“Separately, JPMorgan said it plans to pump $100 mil into bankrupt Detroit”…yeah, right. There is no coincidence here. In case you’re having trouble reading between the lines, the DOJ and Dimon are essentially giving the judge the choice of allowing more aggressive punishment of JPMorgan Chase, but only at the expense of poor, down-and-out Detroit.  As NonProfit Quarterly’s Rick Cohen suggests:

Here is an odd conundrum. A settlement deal negotiated between the federal government and JPMorgan Chase may look like a big number for government and for homeowners, but a number of experts suggest that JPMorgan may be getting off lightly. JPMorgan, for its part, says that the deal includes more than $100 million for Detroit. Should the appropriateness of stricter punishment for home mortgage scofflaw JPMorgan outweigh the need of bankrupt Detroit for $100 million, even if the source of the money might have harmed many Detroit homeowners over the years of its illegal activity? ….

Justice’s public message is implicitly that reopening the settlement for review would delay or perhaps undermine the plan for $4 billion in assistance for homeowners. Although not explicitly part of the settlement, JPMorgan also announced a plan to devote $100 million in loans and grants over five years for Detroit for home mortgages, job training, and blight removal….

Presumably, were JPMorgan Chase dragged back into negotiations with the Justice Department over the $13 billion settlement, Dimon and his board members might find themselves temporarily hard-pressed to make the $100 million commitment to Detroit come to fruition.

And, yes, there is every reason to believe that Justice sees it exactly this way. Robert Scheer on the JPMorgan settlement:

In one of the more obscene moments in the conversations between Holder and Dimon, between Mr. Justice and Mr. Hustler if you will, according to the Wall Street Journal’s interviews with those knowledgeable about the discussions, the two wanted part of the settlement to aid distressed urban areas beginning with bankrupt Detroit: “Both agreed they would like to see Detroit-area homeowners helped. … Mr. Dimon noted that the bank had long had a big presence in that area and that he would like some of the assistance to go there.”

So DOJ gets their record civil settlement, JP Morgan admits doing nothing wrong and gets to whitewash its reputation on the cheap, Jaime Dimon gets his mug in all the papers… Oh, well as long as everyone’s happy.

By: Sandi Behrns

Sandi Behrns is a noted policy nerd, new media & web developer, and consultant to progressive organizations and campaigns. She is a senior contributor to Liberaland, and the Executive Editor of Progressive Congress News.