(HeadlineWealth) Affirmative Action lending isn’t new. It was encouraged by the Community Reinvestment Act of 1977 and contributed to the housing bubble of the mid 2000s.
Banks offered mortgages to under-qualified borrowers, in part due to racial considerations, on terms that put both the borrowers and the banks at greater risk. It turned out that the entire financial system was put at greater risk, as were taxpayers who ultimately bailed out JPMorgan Chase and other banks.
Now “too big to fail” JPMorgan is pushing admittedly risky Affirmative Action loans that carry special terms for racially preferred business owners (whites need not apply).
The following is excerpted from JPMorgan CEO Jamie Dimon’s appearance on CBS’s 60 Minutes (November 10, 2019):
Sonya Mays runs a non-profit housing development company. She’s a lawyer, former investment banker and Detroit native. With more than $4 million from JPMorgan Chase, she acquired 30 abandoned homes and vacant lots so she could work on revitalizing the whole neighborhood at the same time….
She’s benefitting from JPMorgan’s special program of steering funds to minority businesses that wouldn’t otherwise qualify for them.
Lesley Stahl: If you didn’t have the JPMorgan special program, you wouldn’t have gotten the funds?
Sonya Mays: We talked to a lot of other people. (LAUGHTER)
Lesley Stahl: Not just you, Jamie?
Sonya Mays: Yeah, and the– answer– the answer to that is, unlikely….
Jamie Dimon: Are there are things that we could have been doing anyway in normal banking that would’ve helped in these communities? The answer is probably.
Actually, he is studying that, by partnering with local non-profit groups like the Kellogg Foundation and creating an “entrepreneurs of color fund” that’s an experiment on that very issue of loans to minority businesses.
Jamie Dimon: We started small, 40 loans. They’re all paying back.
Lesley Stahl: But those were loans that you would not have ordinarily made.
Jamie Dimon: No, No.
Lesley Stahl: So you changed the criterion for giving credit to someone–
Jamie Dimon: So this is nontraditional banking. I call it kinda venture banking. So look beyond what you do normally. Take a little bit of extra risk. Give them more help.