5
Principles to Restore Trust in Banking
By Keith Mestrich, CEO of Amalgamated Bank
EDITOR'S NOTE: Full disclosure - Keith and I have been friends for many years and he was my last "boss" when I worked with him at UNITE-HERE just before I retired and before Keith went on to run the only bank in America owned by a labor union. - W. Collette
In today's America, bankers are often seen as uncaring, and
media portrayals reflect a view that banks put hardworking people on the
streets. Our industry, which should be a key part of helping people achieve
their economic and financial goals, has lost consumer trust and has done very
little to earn it back.
Amalgamated Bank has taken certain steps to try to change this.
We recently became the first bank to offer an across-the-board minimum wage of
$15 an hour for all employees. We've worked hard to make checking accounts available
to people using the New York City municipal ID, so everyone can bank
responsibly regardless of immigration status. And we've partnered with
charitable organizations including Habitat for Humanity and Jobs with Justice
to raise funds for their programs through our Donate the Change initiative.
Recently, looking at these programs, we realized that there are
five basic principles that underpin everything we do - and that should form a
foundation for banks across the country. I've written to the CEOs of major
financial institutions, calling on them to join Amalgamated Bank in adopting
these five principles of responsible banking.
That letter, reproduced below, will go a long way towards instilling consumer confidence, creating financial opportunity for all, and restoring trust through transparency and corporate governance standards that allow for true accountability.
The letter we sent to banks across the country, which includes
the five principles themselves, says:
To: My Fellow Banking Industry Executives
Bankers today are often seen as singularly focused on the bottom line. Although we know this is not true, the reality is that the industry has lost consumer trust and has done very little to earn it back. At Amalgamated Bank, we're trying to change that - and we need your help.
Bankers today are often seen as singularly focused on the bottom line. Although we know this is not true, the reality is that the industry has lost consumer trust and has done very little to earn it back. At Amalgamated Bank, we're trying to change that - and we need your help.
Like most of you, we believe earning customer trust starts by
committing to corporate principles and following through. At Amalgamated, we
believe in sensible regulation that builds consumer confidence. We believe in
being forceful advocates for creating financial opportunity, and we welcome
transparency and corporate governance standards that allow for true
accountability.
We have outlined our core beliefs in what we are calling the
Five Principles of Responsible Banking. We hope other banks and financial
institutions agree with these basic principles and share our focus on creating
opportunity for all Americans, regardless of the size of their bank account.
Our bank is adopting the following five guiding principles to help steer us into the future and to help rebuild our industry on the trust of our customers. I hope you will join me in adopting these principles - or in creating your own set of ideals designed to drive your bank's efforts to expand access to financial opportunity up and down the economic ladder.
Our bank is adopting the following five guiding principles to help steer us into the future and to help rebuild our industry on the trust of our customers. I hope you will join me in adopting these principles - or in creating your own set of ideals designed to drive your bank's efforts to expand access to financial opportunity up and down the economic ladder.
Sincerely,
Keith Mestrich
Keith Mestrich
CEO and President, Amalgamated Bank
The
5 Principles of Responsible Banking
Resurrect
Our Industry's Mission: Empowering People. Banks can be a tremendous power for
good. When banks act as stewards of a family's financial security, no other
industry's role is more vital to widening access to the American Dream. The
banking industry must return to its founding mission of creating financial
opportunity for everyone, not just for our executives or shareholders. Our
economy thrives when financial empowerment is shared. Through affordable and
accessible products and services, banks can reclaim our role in making sure
that the mission of financial empowerment becomes a reality.
Customer
Trust Must Come First. Banking
relies on trust. A robust system of lending, saving and investing is central to
a strong economy. Customers must trust their banks are never drifting from
their fiduciary responsibility to maximize our customers' financial
opportunities. Breeding an internal corporate culture founded on an unwavering
commitment to protecting customer trust is at the core of maximizing financial
opportunity and preventing systemic financial failure.
Regulation
is Not the Enemy. Banks
have been given an extraordinary responsibility. With that opportunity, along
with the government's insurance of deposits, come regulations designed to
protect consumers. Rather than challenge sensible regulation, responsible banks
should embrace such measures as tools designed not only to safeguard consumer
confidence, but to protect the solvency of an industry with inherent risks, and
to preserve the integrity of our overall financial infrastructure.
Find
Value in Economic Justice. Banks'
interest in broad-based economic empowerment should include advocacy on policy
beyond our customers' banking needs. And we should not reserve the benefits of
banking for the few, while the rest of America incurs its risk. Whether it is
wage fairness, equitable housing programs, or better access to financial
services for the unbanked or underbanked, banks should be forceful advocates
for public policy that allows for the creation of financial opportunity up and
down the economic ladder.
Embrace
Transparency. Banking
can be a complicated business. But too often that is by design, rather than
necessity. Banks must embrace transparency and corporate governance standards
that bolster consumer confidence and allow for real public accountability. An
opaque banking system will always undermine banks' legitimacy by its inability
to inspire trust or empower those who need our services most. We must take an
active role in educating consumers on personal finance and in improving
financial literacy in our most economically vulnerable communities.
It is our sincere hope that other banks and financial
institutions sign on to these principles to show the skeptical public that they
are serious about focusing on opportunity for all Americans, regardless of the
size of their bank account.