Beware of big banks bearing gifts. That note should be attached to JPMorgan Chase’s much-hyped planned investment of $100 million in the City of Detroit. The move is mostly an effort to boost the embattled bank’s public image, in a part of the country where they have deep roots. But corporate philanthropy like this also hopes for a return on investment – often in the form of the privatization of public infrastructure, which JPMorgan Chase certainly has in its sights.
The $100 million investment in Detroit, spread over a five-year period, comes out to about .1 percent of JPMorgan Chase’s quarterly profits. But it represents one of the more generous corporate commitments to the city, as it attempts to emerge from the nation’s largest municipal bankruptcy. The money, split between low-interest loans and grants, will go toward funding community development projects, documenting and eliminating urban blight, providing money for mortgages, training prospective workers and supporting small businesses.
This makes sense for Chase’s bottom line simply because they have a number of branches in Detroit, and over 1 million consumer customers in the region, a legacy going back to the 1930s. A revitalized Detroit helps Chase attract more business, so the bank can do well by doing good. In addition, for a bank that has mostly been in the news of late for paying fines for violating the law, a little shine to their corporate image cannot hurt. “When you’re in a town, you try to be a great citizen there,” CEO Jamie Dimon told the Detroit Free Press.
And if this were only about good corporate citizenship, there would be nothing to worry about. But there’s something far more sinister here. Buried within the commitments is $5.5 million for “strategic initiatives” that includes investing in the M-1 streetcar project, and “bringing the Global Cities Initiative to Detroit.” What is the Global Cities Initiative? Simply put, it’s a giant public relations project meant to encourage the privatization of public resources in cities like Detroit.
The Global Cities Initiative is a joint project of the Brookings Institution and JPMorgan Chase. The project “aims to help leaders in U.S. metropolitan areas reorient their economies toward greater engagement in world markets,” according to the website boilerplate. Basically, JPMorgan Chase gave Brookings $10 million to provide “objective” recommendations to cities on how they can expand their economies and create jobs. Inevitably, these recommendations include plans for increased foreign investment in cities, global trade links and public-private partnerships.
The chair of the Global Cities Initiative is Richard Daley, the former mayor of Chicago. During his time in office, Daley was a national leader in the privatization of public assets, including the Chicago Skyway and the disastrous sale of the city’s parking meters, where the city gave up 75 years of parking revenue for some up-front cash, only to frustrate residents through endless increases in parking meter rates and additional fees. That parking meter deal may net the investment group backed by Morgan Stanley $9.58 billion on their initial investment of $1.15 billion, which shows you exactly why JPMorgan Chase is so interested in the idea.
Interestingly enough, the partnership between Chase and Daley goes back to another gift, when the bank provided $2.25 million for security cameras in 40 public schools in 2009. At the time, Daley was dogged by a scandal over the beating death of Derrion Albert outside a public school, captured on a cellphone video. The gift from Chase helped ease the pressure on Daley by allowing him to tout his efforts to reduce school violence.
Chase helped Daley in his time of need, and now he’s helping them gather up public assets across the country. For example, Chicago has continued its forays into privatization under new Mayor Rahm Emanuel. And the Global Cities Initiative has been a key partner, brokering a recent deal between Chicago and Mexico City. In short, the Chase-funded, Daley-led Global Cities Initiative moves into cities, and sells them on how to expand their economies in ways that have the potential to fleece the public – and reward banks like JPMorgan Chase.
Indeed, Detroit is currently embroiled in debate over whether to sell off its public assets for much-needed cash to pay off creditors. The city’s emergency financial manager has issued a request for offers to privatize its water system. They’ve already privatized garbage collection, selling that off to two contractors. Banks like JPMorgan Chase are well-positioned to profit from this fire sale, especially if their personally funded Global Cities Initiative whispers in the ear of city leaders, telling them how to best improve their economic circumstances. The bank’s investment in the M-1 streetcar offers another window into their plans, as private donors stand to profit over time from the operation of the transit line.
Right-wing groups are licking their chops at the potential for privatizing public assets in Detroit, and so are the banks that would finance the deals. These sales of public goods like roads or services, which initially get funded through tax dollars, always come with loopholes and unintended consequences. For example, the sale of a state highway in Denver prevents municipalities from improving nearby roads in ways that would reduce the profits of the private road. In the Public Interest, a nonprofit documenting the consequences of privatization, has an excellent report on some of the implications.
Detroit really is another piece of a very large puzzle JPMorgan Chase and other financial giants want to construct around public-private partnerships and seizing the value of assets taxpayers built. “To the extent we can begin to find solutions in a place like Detroit, our hope is that those solutions will be applicable in other places around the country and frankly around the world,” said Peter Scher, JPMorgan’s vice president of corporate responsibility, in a revealing window into the firm’s quest for global domination.
In this context, the investment of $100 million is a pittance compared to the potential profit. Similarly, investing $10 million with Brookings in the Global Cities Initiative makes perfect sense if it steers cities throughout America and abroad into the kind of policy solutions that benefit JPMorgan Chase’s bottom line. At face value, JPMorgan looks like a benevolent benefactor helping Detroit through its time of need. But underneath the surface, they have designs on turning that generosity into profit, at the expense of the region’s citizens.