Almost 25 years ago, I sat with Jamie Dimon in his office in New York City. Well before his tenure at JP Morgan Chase (JPMC), Dimon was second in command to Sandy Weill building a financial empire.
I went to see Dimon, who I knew from college days, with Martin Paul Trimble, then the Executive Director at the National Association of Community Development Loan Funds (NACDLF), the predecessor to Opportunity Finance Network (OFN).
Trimble was selling CDFIs, and Dimon was not buying.
In a phrase, he thought CDFIs sounded like one of the dumbest ideas he had ever heard. (Dimon is known for strong reactions, of course, so CDFIs probably were just another “dumb” idea to him–not necessarily the dumbest.)
There’s something encouraging, if ironic, then, seeing Dimon’s face on the cover of Fortune magazine today as the #1 “Change the World” company in the nation because of its work with CDFIs and others in Detroit.
The article spotlights the valuable role CDFIs played for JPMC when it decided to work in Detroit. Making the over-used explanation that banks can not make risky loans, Fortune explains:
JPMorgan Chase spotted a way around the obstacle. Community development financial institutions (CDFIs) specialize in lending to lower-income communities. They’re usually nonprofits, and the Treasury Department exempts them from some rules that govern for-profit banks. CDFIs can take greater risks, accepting higher loan-to-value ratios and extending relatively lenient payment terms. They can also lend to entrepreneurs whose credit scores or lack of a track record would drive banks away.
CDFIs are often slow and steady movers in markets, staying on track one step at a time while others rush in and rush out around them. So it’s worth remembering when you read about JPMC’s great insight (CDFIs) and its investments in Detroit that the tortoise won the race.