Banks Judged On How They Treat People, For Once

The American Prospect: Unsanitized:

If anyone knows something about the economy, it’s banks, and they are preparing for a long, slow recession with a wave of loan defaults. Big banks have been stockpiling cash to cover the losses. Despite this, JPMorgan Chase beat the estimates on its earnings, with strong profits made in equity markets. The Fed rescue can be seen directly profiting Wall Street here, and this was truefor most banks, with the glaring exception of Wells Fargo. Bank windfalls from no-risk fees in the PPP small business program have also boosted the sector.

Typically, this earnings activity would yield banks a positive rating from federal regulators. There are several ratings “scorecards” used, the most prominent known as CAMELS, which measures a bank’s condition based on earnings (the E), capital adequacy (the C) and other factors. But this year, in the wake of the crisis, banks had to contend with a new scorecard, one based more on how banks treat customers and their own workers.

 The Committee for Better Banks, a coalition of frontline workers in bank branches, put out its own scorecard of the COVID-19 response of the twelve largest retail banks between March and May. Only one, Fifth Third Bank, earned above a C, and four banks—US Bank, Wells Fargo, PNC, and Santander—got an F.

The CBB looked at three major categories to build the scorecard: how it handled small business lending, worker protections, and customer protections. It used publicly available information and data from its own members to construct it.

If a bank canceled stock buybacks, facilitating more lending, it got 10 points. If it favored clients over non-clients with “concierge treatment” in the PPP small business program, it lost points. On worker protections, points were awarded for having a telework policy (including for call centers), offering paid leave and hazard pay, social distancing and enhanced cleaning policies in branches, and announcing no layoffs in 2020. For retail customers, CBB looked at relief from bank fees, compliance with federal policy on one-year foreclosure forbearance and eviction moratoria under the CARES Act, and forbearance on student and auto loans.

The results were pretty stark. Eight banks didn’t comply with the one-year foreclosure forbearance from the CARES Act; some would only execute the policy if the customer used the word “forbearance.” Six banks would not commit to retaining workers through 2020. No bank maintained a consistent policy with others on worker protections, suggesting a “go-it-alone” approach. Some workers said they still face unrealizable sales goals, even during the pandemic, while not receiving proper protections. “While Wells Fargo was fighting to get its asset cap lifted during the early stages of the pandemic, I was fearing for my and my family’s health as I continued to go into the office day after day,” said Alex Ross, a loan specialist with Wells Fargo.