The biggest bank in America announced a major expansion into the nation’s capital Wednesday, promising to open 70 new branches and committing to make $4 billion in home mortgage and small-business loans in the area over the next five years.
“We go in with philanthropy, small-business lending, lower- and middle-income mortgage lending, affordable housing,” Jamie Dimon, JPMorgan Chase & Co.’s chairman and CEO, told “CBS Evening News.” “So it’s the full face and force of JPMorgan, hopefully, helping these communities.”
Chase’s announcement came a month after Reveal from The Center for Investigative Reporting showed how the bank was not bound by provisions of the 41-year-old Community Reinvestment Act simply because it did not maintain brick-and-mortar branches in the Washington area.
The bank did maintain one office, across the street from the White House, that specialized in providing services to the wealthy, with “an emphasis on structuring large and complex loans.” Because that office did not take deposits, Reveal reported, it did not trigger enforcement under the Community Reinvestment Act.
The result: Even though people of color make up a majority of the region’s population, government lending records analyzed by Reveal showed African Americans received just 23 of the 1,119 conventional home purchase loans Chase made there in 2015 and 2016. Latino borrowers received 35 loans. Reveal’s analysis also found Chase’s lending patterns in the Washington area skewed whiter and richer than other banks, which maintained large numbers of branches in the area.
With Chase opening branches in the region, the bank now will be evaluated by the Office of the Comptroller of the Currency, which will scrutinize its lending in low- and moderate-income neighborhoods.
“This is a pretty significant,” said Jesse Van Tol, chief executive at the National Community Reinvestment Coalition, a nonprofit advocacy group. “It’s not a silver bullet in terms of improving performance, but it does provide some scrutiny.”
Chase spokeswoman Trish Wexler declined to comment when asked whether Chase would be making any specific efforts to seek loan applications from people of color. But she said the bank recently increased its homebuyer grant to $2,500, available for those who purchase in low- and moderate-income areas, with an additional $500 for borrowers who complete a homebuyers education course.
Previously, Chase had criticized Reveal’s analysis for focusing only on conventional home purchase loans, which, it argued, skewed the results.
In its announcement, Chase promised to open 20 percent of its new branches in federally designated low- and moderate-income neighborhoods, including Wards 7 and 8 in Washington; Baltimore; and Prince George’s County, Maryland.
Federal banking records reviewed by Reveal show Chase started petitioning to open new branches at the end of January and so far has asked regulators to approve eight across Maryland, Virginia and Washington. Five of those are in neighborhoods eligible for credit under the Community Reinvestment Act, including one in the Columbia Heights neighborhood of D.C., which census records show is 96 percent African American.
Government lending data reviewed by Reveal shows that Chase has made only a handful of loans in those eight neighborhoods – just 10 conventional home purchase loans in 2015 and 2016, six of them to white borrowers.
Chase says the rest of the branches will be located slowly over the next five years.
“Our real estate team here has been scouring the D.C. area, and we’re buying buildings and rehabbing them,” Chase’s Wexler said. “But this will not happen overnight. We have to hire and train 700 people, and that’s a process as well.”
Van Tol said his organization’s focus will shift to monitoring Chase’s lending during its expansion to ensure it lifts up communities at risk of displacement as gentrification takes hold.
“It’s important to address gentrification of these neighborhoods,” Van Tol said. “So we would like to see some goal setting about how they’re going to contribute in a positive way to building the community’s wealth.”
A loophole in the Community Reinvestment Act allows banks to claim credit for lending in low-income neighborhoods even if they lend exclusively to upper-income whites, a factor that has fueled gentrification in some areas.