Jamie Dimon, CEO of JPMorgan Chase, is testing out a new type of business investment in the city of Detroit. The idea grew out of Dimon's interest in changing the way the bank engaged in philanthropy. He wanted to try to tackle a major national issue, such as urban poverty, by applying the same type of expertise and analysis to the problem the bank uses to advise large corporations.
His first goal, he said, would be the city of Detroit, right after it filed for bankruptcy.
Jamie Dimon: Detroit is probably one of the biggest flaws in an American city that we have ever seen. My view is, why can't we make Detroit an example of America's exceptionalism, get people to roll up their sleeves, get together and change the tide of history right there, right now?
Then in 201
Mike Duggan: My assistant came in and said, "Jamie Dimon is on the phone." And I said, "It's a great coincidence. It's the same name as the president of the largest bank in America." She said, "I think it's JPMorgan (LAUGH) Jamie Dimon." I had no idea Jamie Dimon knew who I was . So I picked up the phone … I recognized
Lesley Stahl: He called?
Mike Duggan: Cold called. I just – no – no warning. And I recognized his voice. He said, "I want to help the city of Detroit."
For Mayor Duggan, the phone call was about as unlikely as the victory just months before. He won surprisingly as an enrollment candidate and became the first white mayor of Detroit in 40 years in a city nearly 80% black.
Lesley Stahl: Describe Detroit when you came in as mayor.
Mike Duggan: Half the street lights in town were out. How do you fix street lights? one third of the buses were damaged in the garage. People stood in street corners for hours – waiting for a bus. There were only eight work ambulances in the entire city. There were times you could wait for an hour when you called 911. And between 2000 and 2013, 250,000 people left the city of Detroit. I mean, that's more than the entire population of the city of Buffalo. So if you can imagine everyone in Buffalo leaving in 13 years and leaving all the buildings left empty. That's what Detroit experienced leading up to bankruptcy.
Jamie Dimon: So we know, in a certain neighborhood, you travel 20 minutes to buy milk or 20 minutes to go to a restaurant, which means a store can be 10 minutes away.
Lesley Stahl: To help the young entrepreneur, who wants to open a restaurant. And you tell him the best place to do it.
Jamie Dimon: To help you where you open a restaurant, where you place affordable housing.
The first order of business was affordable housing. Other investors, such as the owners of Quicken Loans and Little Ceasar's Pizza, already poured money into the downtown redevelopment.
So the mayor asked Dimon to concentrate on the astonishing neighborhoods that the bank's data identified as ripe for new development, neighborhoods like this one at Detroit's northern end.
Lesley Stahl: So this is typical, isn't it?
Sonya Mays: Yes, this is a very good example of the challenges facing the Detroit boroughs.
Sonya Mays runs an ideal housing development company. She is a lawyer, former investment banker and native of Detroit. With more than $ 4 million from JPMorgan Chase, she bought 30 abandoned homes and vacant lots so she could work on reviving the entire neighborhood at the same time.
Sonya Mays: This is a great significant investment that is really meant to start other investors, homeowners, residents coming into this neighborhood. I mean look at this. This will not hit anyone. You have to figure out how to cope like that. You really have to attack everything that is destroyed that will potentially reduce property values -
Lesley Stahl: So you have to do the whole street?
Sonya Mays: You have to do it block by block.
She benefits from JPMorgan's special program to manage funds for minority businesses that would otherwise not qualify for them.
Lesley Stahl: If you didn't have the JPMorgan special program, wouldn't you get the money?
Sonya Mays: We talked to a lot of other people. (LAUGHTER)
Lesley Stahl: Not just you, Jamie?
Sonya Mays: Yes, and – the answer – the answer to that is unlikely. The answer to that is the best we could probably have done, but for this program and this investment is, make a house, complete a house, sell a house. Go to the next house, make a house. And at the rate I – I did this math at some point. In that way, like that – you know, it'll take, you know, a couple of centuries.
This house is one of several Sonya Mays is done.
Lesley Stahl: Oh wow.
Her work in this neighborhood has been so successful that she expanded it to other parts of Detroit.
Lesley Stahl: Didn't you find, Jamie, that there was some sort of racial bias ainst giving a loan?
Jamie Dimon: Sure.
Lesley Stahl: To Blacks and Other Minorities?
Jamie Dimon: Yeah. I think this is true in poor neighborhoods.
Lesley Stahl: But if you find that someone like Sonya doesn't necessarily give her, you give her a loan you wouldn't have before, but they'll pay it back. Are you starting to think that what you now consider risky has changed? In your mind, should that change anywhere?
Jamie Dimon: Are there things we could have done anyway in a regular bank that would help in these communities? The answer is probably.
Actually, he studies it by working with local nonprofits such as the Kellogg Foundation and creating a "founders of color fund" which is an experiment on precisely the issue of loans to minority businesses.
Jamie Dimon: We started small, 40 loans. They all pay.
Lesley Stahl: But there were loans you would not normally have given.
Jamie Dimon: No, No.
Lesley Stahl: So you changed the criterion to give credit to somebody –
Jamie Dimon: So this is unconventional banking. I call it quite venture banking. So look beyond what you normally do. Take some extra risk. Give them more help.
The loans have gone to open a wine shop, a gym, a restaurant. In total, JPMorgan Chase has helped more than 5,000 companies here.
Jamie Dimon: Just writing a check doesn't work very well.
Dimon has also assembled a team of bank experts who spend several weeks at a time. lives and works in the city and provides many practical advice.
Jamie Dimon: Very often, these entrepreneurs, they needed help: How do you sign a lease? How do you negotiate with the government? How can I start spending a budget? How do you create traffic? How do you do social media? How can I get into the real banking system, which is the ultimate goal? So yes, it can change how we bank for small businesses and we get better at it.
Lesley Stahl: Detroit was in a lot of trouble before the financial crisis. But the financial crisis only made them 100%. It– it was crushing. Do you in any way feel that you are atoning for the sins of Wall Street when you go to Detroit? Is it in your head?
Jamie Dimon: I didn't want to use the word "atone." I all– think we owe it back to society.
Lesley Stahl: But Detroit, specifically? The financial crisis only decimated the city.
Jamie Dimon: And I think we all have to earn a little bit of our trust because of what happened. It's okay to say, "Yes, we should do better than we last did." And I think that's true for everyone involved in the … crisis.
The bank has also brought in more investors while the mayor is working hard to lure big-time producers back to the city.
Early this year, he persuaded Fiat Chrysler to build a new facility that would mean 5,000 new jobs. The mayor needed to assure those companies that Detroit could supply well-trained workers. But …
Mike Duggan: Our residents did not have the skills to meet many of these jobs. And Jamie Dimon got JPMorgan Chase to do a whole analysis, and that led to the program we have today, what we call Detroit at Work, one of the largest employment agencies in the country where we now get Detroiters, line them up for jobs at Fiat Chrysler, set them up for jobs in a variety of areas.
From here, they are sent to job training programs that, based on JPMorgan's analysis, have redesigned their approach.
Mike Duggan: We took all the training programs in town, and they now train only on jobs people hire. Which may seem obvious, but it wasn't before.
Many of the training programs are run by nonprofit organizations such as Focus Hope.
Lesley Stahl: So this kind of thing can be at the Chrysler factory, for instance.
Jamie Dimon: Yeah.
It received a $ 1.3 million grant from JPMorgan Chase.
It's all part of the city's long game to reverse Detroit's long decline. It is an effort, says the mayor, that is a pressure on history.
Mike Duggan: It goes back to federal politics in the 1930s. It would not lend in areas where people of color lived. You've had decades of federal policy that has worked against people of color to benefit Caucasians leaving cities.
Lesley Stahl: JPMorgan Chase has now committed $ 200 million –
Mike Duggan: Right. Right.
Lesley Stahl: – to the city. Is it enough? I mean, your problems cost a lot more than that.
Mike Duggan: No one says JPMorgan Chase is the city's savior. You know, we have a lot of big investors in this city. But they have been an important piece. They pushed this recovery of the city along the track faster than it would have been.
Lesley Stahl: How far along the plan have you come so far.
Mike Duggan: I'd say we're about the third inning of the game. (LAUGH)
Lesley Stahl: Third game of the game.
Mike Duggan: We have a long way to go, but we're definitely on the right track.
JPMorgan Chase has now committed half a billion dollars to take what was learned in Detroit and export it to other cities, Chicago and Washington DC
Produced by Richard Bonin. Associated producer, Ayesha Siddiqi.