Citi Is Rethinking Racial Audits Dimon Dismisses as Bureaucracy

Citigroup Inc. said it’s reconsidering a shareholder proposal requiring its board oversee an audit analyzing its adverse impacts on communities of color -- a measure which drew sharp reproach from JPMorgan Chase & Co.

Nearly 40% of Citigroup shareholders voted in favor of such an audit during the firm’s annual meeting last month. Even though Citigroup’s board recommended investors vote against the proposal and it failed, Chief Executive Officer Jane Fraser said Thursday while testifying before the House Committee on Financial Services that the bank is considering it once again.

JPMorgan CEO Jamie Dimon said during the hearing that he remains staunchly opposed to such an audit, saying it would add only “bureaucracy and B.S.” to the firm’s efforts to help communities of color.

Citigroup has “just put out another very extensive update on our $1 billion action for racial equity plan,” Fraser said, noting much of that plan has also been verified by third parties. “We didn’t think it was needed to have a separate audit, but it is something we’re looking at again, given it was brought up by our shareholders.”

Citi Is Rethinking Racial Audits Dimon Dismisses as Bureaucracy

Shareholder proposals for racial audits were filed at Wall Street banks and other finance firms during this year’s proxy-voting season. The votes failed at the companies, with directors and management teams encouraging shareholders to reject such audits. Fraser’s about-face is notable because her bank had gone so far as to ask regulators to block the audit resolution -- a move that failed.

The racial audits were part of a broader push by shareholders to hold companies accountable for statements of support they made to minority communities last year after the killing of George Floyd by police prompted widespread protests. Racial audits have emerged as a new shareholder proposal. They are an independent analysis into a company’s business model to see if, and how, it causes or perpetuates racial discrimination.

BlackRock Inc. broke ranks with its financial-services peers last month by agreeing to perform a racial audit, joining companies including Airbnb Inc. and Facebook Inc. that have conducted such reviews in recent years.

Reparations Discussion

Fraser and Dimon were among the six CEOs of the largest U.S. banks to speak before the House committee on Thursday.

During the hearing, Rep. Al Green asked each of the chiefs whether they would atone if they discovered their firms either owned enslaved people or used them as collateral for loans. JPMorgan’s Dimon said his bank has researched this topic and found one of its predecessor firms did engage in such activity in some cases.

“We’re talking about the ownership of human beings, Mr. Dimon,” Green said. “You must say, Mr. Dimon, we owned them and here’s what we’re doing to take corrective action. Find those families. Find those families that are still with us. Atone.”

Dimon vowed to meet with Green to come up with ways his firm could help those affected.

“We apologized profusely at the time” the bank learned of this activity, Dimon said. “I would love to come see you and figure out what you think we could do that would atone properly to the families that were damaged by these activities 200 years ago.”

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