JPMorgan Chase & Co. CEO Jamie Dimon was inspired to invest in the struggling city of Detroit after visiting his daughter in the West African nation of Ghana.
The unfinished buildings there resembled the crumbling infrastructure in America’s Motor City. With the money his company is spending, hopes are high the struggling city has finally turned a corner, reports CBS News correspondent Vladimir Duthiers.
In Detroit, the challenges stand tall for all to see — block after block of run-down businesses; neighborhoods once thriving but now mostly empty.
It’s a familiar story that’s played out over 50 years. As the manufacturing and auto industries declined, Motor City slowly shifted into reverse. But like its resilient residents, this gritty city is poised for a resurgence.
It turned to private institutions for financial support, including the country’s largest bank, JPMorgan Chase and Co., and Dimon is behind the push.
“Our goal is to help Detroit thrive, not to just have JPMorgan do it. JPMorgan is just a piece of it,” Dimon said.
Last May, JPMorgan Chase pledged $100 million over five years to help revitalize the city.
What made them decide this was an investment they had to make?
“We’re the largest bank here, consumer bank, middle market bank and large corporate bank. We invested here,” Dimon said. “And you know, we’re patriotic. We want to see Detroit revive, grow and start to thrive again.”
That’s because more people and jobs create more customers and opportunities for the bank.
Now nearly one year later, Dimon’s goal is closer to reality as $34 million has already been doled out. The money has been used to fix-up dilapidated buildings, grow small businesses and help build a much needed street car.
Like any vigilant banker, Dimon came to check on his investment.
Over two days, he met with local leaders and entrepreneurs at nonprofits and worker training facilities to listen, watch and discuss ways to bring much needed jobs to the city.
“If you’re a business and you want to start, this is a great place to start, your employees can get cheap homes and so your whole cost rate will be lower,” Dimon said. “And that eventually, you know, that’s capitalism. It’ll attract talent and people and once you get enough it does become self-sustaining.”
Dimon credits one man with making all this possible: Detroit’s new mayor, Mike Duggan.
In one year on the job, Duggan helped lead the city out of bankruptcy and put it on track to a balanced budget for the first time in more than a decade.
“We’ve got businesses expanding with loans from them, we’ve got people moving into houses who could have never gotten a mortgage,” Duggan said. “So when you put the two together, we’ve got some progress.”
That meant real, tangible progress for Corridor Sausage owner Zachary Klein. While skeptical at first, he used a loan from JPMorgan Chase to grow his business — from making hundreds to thousands of pounds of sausage each week.
“There’s always that Detroit is the super-hot city for everyone to come in and save, so it seemed like a little bit of a PR move,” Klein said. “But when the money actually started coming in, it was great. It’s helped the city out a lot.”
While Klein has come around, not everyone trusts the bank’s motives, viewing this effort as a way to make up for years of bad practices that helped lead to the financial crisis.
“I know the American population is mad. I think they have the right to be mad and we should acknowledge that and fix the financial system,” Dimon said. “But while we’re doing that, we should also say ‘Let’s develop the communities. Let’s create jobs, lets help businesses.'”
But Dimon knows the problems facing Detroit remain real. High crime rates persist, unemployment is more than twice the national average, schools are substandard and the city’s population continues to shrink — down more than 1 million since its high in the 1950s.
Still, he insists Detroit can and will come back and is heartened by the success they’ve already had.
“I think it’s been great. I think our people have been great, I think the mayor and the governor are still pushing full speed ahead. That makes me feel damn proud,” Dimon said. That’s why we’re here and of all the things I do, it’s probably one of the most rewarding things I do.
Dimon hopes any lessons learned from this initiative can be applied to other cities around the U.S. and the world, and vice-versa. Developing communities, sharing prosperity and creating jobs, he says, are what a bank is supposed to do.