Monday, November 30, 2020

Flint Sues JPMorgan Amid Water Crisis (2014-2020)

Flint Michigan sues JPMorgan Chase over water crisis (2014-2020)

JPMorgan Chase & Co. is a relatively new bank founded in 2000, and it is an American multinational investment bank and financial services holding company that is ranked by S&P Global as the seventh-largest bank in the world and largest bank in the United States based on total assets. But even banks like JPMorgan Chase are not always perfect. They might be far from it mainly because of a lawsuit from the city of Flint Michigan. Flint had been using the same water supply as Detroit had been using, but after JPMorgan underwrote a bond sale that financed and enabled Flint’s participation in the Karegnondi Water Authority pipeline instead, things started to go downhill for Flint residents. This water compared to the water that Detroit was receiving was significantly different; the flint river water was unfiltered, untreated, and contained dangerous components like legionella bacteria along with lead. 

Through the analysis of this case, this paper will describe JPMorgan Chase’s actions that cost some people their lives, while looking at the case through a few different ethical theories, which includes Individualism, Utilitarianism, Kantianism, and Virtue Theory. This will be done to decide if the case is ethical or unethical according to each different view. For example, an Individualist could claim that what JPMorgan Chase did was ethical because underwriting a bond sale to make more of a profit is a completely legal action to take. On the other hand, a Utilitarian would argue that what they did was unethical because not even the majority of people were happy with the actions that these banks took, in fact, the majority of people were not happy with these actions. Similarly, a Kantian would agree that JPMorgan was unethical, they treated the city of Flint as a mere means to profit off of them. Lastly, using the virtue theory, it would also deem banks actions to be unethical, because JPMorgan was not honest, they did not have the courage to tell people, and they knew what they were doing was wrong.

Ethics Case Controversy:




            On April 25, 2014, Flint, Michigan officials switched the water supply from Detroit’s Water and Sewerage Department to the Karegnondi Water Authority, claiming to be for a cost-cutting measure for an economically struggling city. But before going more in-depth with what happened, the background information for the city of Flint is vital to the story. It was said that the Flint River had essentially been a waste dump for many industries nearby, and as most people know, the automobile industry was centered around Michigan, which means during those times, profits and income continually were rising. But by the 1980s, oil prices and automobile imports were rising, which meant incomes had been slowly dropping, and that led to many houses being deserted, people fleeing the city, and Flint being in millions of dollars in debt.

Since the city was in so much debt, officials had to find a way to start cutting costs and get the city back on its feet. So, in the early 2010s, the decision was made to switch the city’s water supply from the treated water of Detroit to the unfiltered water of Flint River until a new pipeline was created. When this switch occurred, families started receiving the unfiltered, untreated water and many people were exposed to chemicals that were not safe to be in the water. Although this switch was supposed to save the city millions of dollars, this water supply, as stated previously, led to countless cases of lead poisoning, kids were exposed to legionella bacteria, and many lives were permanently changed (this ultimately led to many residents filing lawsuits against each of the three banks). 


            So, according to the lawsuit, it states that without the money from the banks, Flint residents still would have to use Detroit water because they would not be able to afford this deal. With the money from the banks, Flint was able to join the Karegnondi Water Authority; the KWA would construct a 63-mile pipeline from the water in the lake to Flint and two pup stations, in total the cost would be around $300 million, and the bond allocated was $85 million. In other words, residents say that without the bond financing, Flint wouldn't have been able to join the KWA, in turn meaning the KWA would not have been able to commence construction, and these cases of lead poisoning and so on would have been easily prevented. Ultimately, more than 2,000 victims of the Flint water crisis sued J.P. Morgan Chase & Co, Wells Fargo and Stifel, and Nicolaus & Co in Flint federal court for their alleged role in the Flint water crisis. From the lead leached pipes, 12,000 children had been exposed to dangerous levels of lead and caused at least 12 deaths.



            Stakeholders within this controversial mess would include JPMorgan Chase, Wells Fargo, Nicolaus & Company, people who had shares in either of the three banks, officials of Michigan like the governor, and pretty much the entire city of Flint (whoever had to use the unsafe water supply)

(Jamie Dimon, CEO of JPMorgan)

            First of all, residents of Flint easily suffered the most because of the actions taken by the three banks. As stated before, if these banks did not provide Flint with the extra needed money, then they would have kept using the Detroit water supply, and in turn, there would have been no cases of lead poisoning or legionella bacteria. Also, the governor played a major role, because he had to of known about the waste dumping that occurred in the Flint River, in other words, that the water was simply not safe for people to be consuming. As for the banks themselves, every higher-up employee ranging from the top of the chain, or CEO’s, to any other employee that is involved in making decisions, must have been involved in this specific decision. It was said that the banks and the governor knew that the water was untreated and that it could hurt many people, yet everyone involved in this decision still seemed to be okay with that. Along with the banks’ decision-makers, people involved with the banks’ finances and accounting were likely involved because they manage the money aspect, so without involving them they wouldn’t be able to supply the money. 


Friedman’s individualism states that “the only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders within the law of the land.” From this view, it is easy to say that JPMorgan Chase was well within the requirements of Individualism, as the only goal of the business is to profit, as long as it is within the law. It is not against the law to underwrite a bond sale or provide money to eventually gain money, and they are trying to make a profit for themselves and their stockholders, so when thinking of it that way, it is completely ethical. On the contrary, if people deem supplying unfiltered/untreated water as against the law, or that because JPMorgan knew the risks of their actions and still proceeded with them, then it is against the law, then yes this could also be seen as unethical and not following the idea of Individualism. 


(Flint/Detroit Water Appearance)   

            Utilitarianism is said to be an ethical tradition that directs us to make decisions based on the overall consequences of our acts. In other words, a Utilitarian believes that the most ethical choice is the one that will be the most beneficial for the greatest number, or the choice that makes everyone happy with the result. So, if someone is not happy, then a Utilitarian would most likely not deem the act as ethical. On the business side, everyone is happy that they are going to be making money because of the actions committed. When only looking at the businesspeople impacted, then it would be considered ethical. But that is not the case, the whole picture is needed in this case especially. Yes, maybe the banks and people involved are happy with the result of making more money, but the entire city of Flint is unhappy with this decision to switch water supplies from a safe source to a deadly source. Put differently, JPMorgan and the other two banks would not meet the Utilitarian requirements, and a Utilitarian would easily deem JPMorgan’s actions to be unethical. In this case, not even a majority of the people would be happy with the end result.



            Kantianism is an ethical theory that states everyone should be treated as an end, and not as a mere means, and it uses the formula of humanity to supply its structure. JPMorgan Chase and the two other banks decided that in order to make a profit here, they essentially have to use the city of Flint. These banks knew the Flint River was not safe, yet they still supplied the money to make this switch happen. In short, a Kantian would mark this case as unethical because the banks used Flint to profit off of them, or they used the city as a mere means. Banks and businesses around the world are always just trying to profit, and in this case, to a large extent, is just JPMorgan trying to make money despite knowing the possibilities of people’s lives permanently changing. As for the city, they were trying to do what is right, but at the cost of saving money, so when this opportunity to cut into the debt arose, city officials had to jump in and join the decision. In conclusion, a Kantian would say that the banks’ actions were unethical because they treated the city of Flint as a mere means to profit off of them, knowing the consequences that would potentially come with it. 

Virtue Theory:


            Virtue theory uses the four cardinal virtues of courage, honesty, justice, and temperance to evaluate if an act was ethically correct or not, and also uses these virtues to determine the development of good character traits. In using the four virtues to determine if JPMorgan Chase was within ethical boundaries, it was discovered that what the banks did was greatly unethical. First, using the virtue of courage, the banks showed this in the wrong way. Flint officials had courage because they wanted to cut the amount of debt that they were in to help the city of Flint, and even banks had courage because they knew the consequences that would occur if they were to supply the money, but they did not have the courage or will to tell people that this water was not safe to use. Additionally, and similarly, the banks showed no bit of honesty, as they all knew that the water was unsafe for people, yet they still did not tell anyone and kept denying any claims against them, even if they were true. In terms of temperance, JPMorgan Chase did not refrain from supplying the money for the pipes to be built, or for the water source to switch from safe water to unsafe water, when they easily could have stepped back and realized that what they were doing was wrong. And lastly, the banks provided people with absolutely no justice, as many Flint residents, especially younger residents, were severely hurt because of the actions these banks went through with. 

Justification Ethics Evaluation:


            It does not take the smartest human on earth to realize that what JPMorgan did was completely out of line and unethical. Everyone involved in this decision knew the risks that came with switching the water supply while building the new pipes, yet no one seemed to care enough to stop this transaction from taking place. These banks had a decision to make, either one, provide money now and profit off of it later, or two, find somewhere else to invest that money, and save Flint residents the terrible times that would be ahead of them using water that was not safe. 

(Causation of Unsafe Water)

Most people, and definitely enough people, knew that Flint River was a waste pile. So how could companies like these banks still go ahead with this decision of temporarily switching to the Flint River as a water supply? Money. As stated earlier, most banks and businesses just want to profit, and they don’t care what the side effects may be from their actions. In this case, it cost Flint residents a lot more than just a few dollars. 

Company Action Plan: 


            Flint at the time (before the bond was written) was a struggling city that was in millions of dollars in debt, and they couldn’t stay in debt for too long. This led to the city governor having the difficult task of cutting the city’s debt fast, and when the opportunity popped up, it was increasingly hard to say no to cutting into that debt. Obviously, no one wants to harm people just because, but with cutting debt came the issue of what happens because of this action. Well, it must not have been discussed very much, because the only focus at the time was to save money, and at the same time that this would help the residents of Flint because the city would hopefully be debt-free much sooner. 

JPMorgan Chase is one of the most trusted and elite investment banks, and it would come as a shock if they intended for people to get hurt because of a bond they underwrote. Either way, they were involved in a huge crisis, and as a leading bank in the world, that cannot help the company overall very much. From this, customers could easily lose all trust within the bank, because JPMorgan was not honest to the people of Flint, they did not provide them with anything but a small donation as of lately, and each of the three banks still try to deny the claims set against them. The only way for them to turn this massive negative into a positive is to use it as an example of what not to do. Below are two of the business principles of JPMorgan Chase:


-       We focus on the customer

-       We are field and client-driven; we operate at the local level

-       We build world-class franchises, investing for the long term, to serve our clients


-       We will not compromise our integrity

-       We face facts

-       We have fortitude

-       We foster an environment of respect, inclusiveness, humanity, and humility

-       We help strengthen the communities in which we live and work

JPMorgan Chase must admit to their fault if they stand by these principles, as they say, they face facts, have fortitude, focus on the customer, and help strengthen the communities in which they live and work. JPMorgan did not admit to their wrongs, they have not faced facts, and they definitely did not strengthen the community of Flint by allowing them to drink unsafe water. Although in 2016, they made a $150,000 donation while offering to match donations up to a total of $350,000. This is a step in the right direction, but still not enough for the Flint residents, or even people who are apart of JPMorgan. For them to make things right, they would need to admit to their wrongs, use this as a reason in the future not to put people at any type of risk, and help the city of Flint climb out of their debt. This would provide Flint residents and JPMorgan customers with the needed trust they may have lost during the crisis and would allow JPMorgan to say; look at what we did to help the city of Flint after admitting what we did was wrong, we did not shy away from our wrongs, and we will improve every day for our customers knowing that we can always be better. This would keep customers, and even attract new ones, as they would be seen as a bank that makes mistakes like every other human, but does not run away from it, and instead makes things right because of it. Whether it be providing more money to flint, or cleaning the river to make it safe, JPMorgan owes a public apology for harming so many lives. 


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Network, 8 Oct. 2020,


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Water Crisis.” WEYI, 7 Oct. 2020,


Dimon, Jamie. “Business Principles.” Who We Are: Business Principles, 2020,

DesJardins, Joseph R. An Introduction to Business Ethics. McGraw-Hill/Irwin, 2014. 

Malo, Sebastien. “Flint Water Crisis Victims Sue Chase, Wells Fargo.” Reuters, Thomson Reuters, 

7 Oct. 2020, sue-chase-wells-fargo-idUSL1N2GY2I3. 

Palmer, Gianna. “Flint Water Crisis: Living One Bottle of Water at a Time.” BBC News, BBC, 22 

Jan. 2016, 

Ruble, Kayla. “Flint Residents Sue Investment Banks, Accuse Them of Helping Create Water 

Crisis.” The Detroit News, The Detroit News, 7 Oct. 2020, 




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