Photo of abandoned Packard Automotive plant in Detroit, 2009 by Albert Duce. Used under creative commons license and available on Wikipedia.
JP Morgan is in the business of taking deposits and issuing loans. That business thrives during times of economic growth when businesses borrow to finance profitable ventures. So it makes sense for JP Morgan to invest in the economy, and that is exactly what JP Morgan’s CEO, Jamie Dimon, announced in his interview with Matt Lauer on NBC’s Today Show.
According to the article from Today Money (Stump, 21 May 2014), Dimon announced a $100 million investment by JPMorgan Chase into Detroit.
From the article:
Detroit, the largest U.S. city to seek bankruptcy protection, is $19 billion in debt and currently has an unemployment rate of about 14%, more than double the national average.
"We're doing this to grow investments, to grow the city, and create a healthy and vibrant city,'' Dimon said. "And if that happens, it's good for us, too. I also look at it as an American patriot. This is one of the few cities that hasn't had a renaissance. Most other cities have. If it's done right, they can have one here, too."
In a city where 40 percent of the buses are broken, 40 percent of the streetlights don't work and a third of the population has left over several decades, Dimon sees opportunity. The bank is hoping to make money from interest on the loan and by rejuvenating a market in which it has a million regional customers.
In your opinion, is this announcement by JPMorgan a publicity stunt, or is it good business sense? Why?