MDI Among Detroit Orgs Receiving Funds from Chase Investment

May 20

11:00 AM

By Erin Piscopink

Tagged: All Neighborhoods

Read the Free Press article in its original format HERE

JPMorgan Chase: $100 million to Detroit is good business, not charity

John Gallagher for the
Detroit Free Press

If JPMorgan Chase Chairman and CEO Jamie Dimon wanted to drive home one point during his visit to Detroit on Wednesday, it was that Chase's $100 million in loans and grants for the city is an investment, not philanthropy.

"It's not meant to be charitable. It's meant to kick-start things that otherwise would not take place," Dimon told the Free Press editorial board before a public lunch where he formally announced the investment in a variety of Detroit initiatives.

"Detroit could be a shining example of people in America coming together, all types, and saying, 'We're going to fix our city.' "

Over five years, the money — about half for grants and half for nontraditional loans — will ramp up the city's blight-removal efforts and promote home ownership through rehab loans, pump money into redevelopment projects and train entrepreneurs. The money, to be distributed through nonprofits, includes investments in the M-1 Rail streetcar project, Eastern Market, Focus: HOPE and a variety of workforce training and entrepreneurship programs.

The bank will make money through interest on loans, but Dimon said Wednesday that the main economic strategy is one of nest building, revitalizing one of its major markets in a nontraditional, almost experimental way. Dimon took pains to say that Chase — a successor firm to the old National Bank of Detroit founded during the Great Depression by General Motors — is already a major player in the Michigan market. The bank has almost 1 million consumer customers, and over the past 18 months has loaned or raised $23 billion for big companies and municipalities in the state.

"We have a huge vested economic interest" in seeing Detroit recover, he said.

The approach Chase is taking, Dimon said, is less like a normal bank lending money and more like backing entrepreneurial start-ups. "It's not venture capital, but it's close to that, thinking a little outside the box of normal lending."

Noting that legendary financier J.P. Morgan once said he lent money based on the character of the borrower, Dimon said Chase was impressed by the character of Detroit and Michigan and the quality of leadership at the city and state level.

"Now's the time" for progress, he said. "You finally have all the forces coming together."

Dimon said he was fine with some of the multiple ventures not succeeding so long as Chase learned from the experience.

"I think most of them will work, some of them probably won't, and we're going to learn some great lessons," Dimon said. "If we fail, that's OK. If you're not willing to try something, that's a terrible thing."

Mayor Mike Duggan, joining Dimon at the editorial board meeting, echoed Dimon's words.

"There has not been the slightest charity tone to this," he said, describing Chase's investment as "strictly business."

Peter Scher, Chase's executive vice president and head of corporate responsibility, said Chase hopes to use its experiment in Detroit to fashion programs that may work in some of the many other cities around the world that are struggling.

"We're doing this in a way we haven't done in other cities," Scher said. "Longer term (loans), patient capital, and hopefully it does become a model for other cities."

Dimon said Chase's decision to invest big-time in Detroit is popular with the bank's employees.

"Inside our company, people absolutely love" the program, Dimon said. "I've gotten e-mails already (saying), 'I grew up in Detroit' (and) 'I went to school in Detroit.' They love to see JPMorgan doing good things."

At the luncheon at the Garden Theatre in Midtown, Gov. Rick Snyder hailed the Chase investment. "We're the comeback state," Snyder said. Citing progress in Detroit, he added, "Now's the time to step on the gas."