Some banks are trying to clean up their public image, and it seems very low-income individuals are the targeted beneficiaries. Typically forgotten and underserved, large financial institutions have recently begun creating financial services and products geared towards helping individuals with troubled finances that were being squashed by predatory bank overdraft fees. These programs and products are not financially beneficial for these institutions, but for banks who played significant roles in creating the Great Recession, an increase in public approval may be just as valuable.
Mike Mayo, a banking analyst at the brokerage firm CLSA states “This is good for the customers and good for the banks’ images…Banking still ranks among the worst industries in the public’s opinion.” Banks have even gone a step further; some of the larger financial institutions such as Bank of America, JP Morgan Chase, and American Express have physically shadowed low-income individuals in order to develop products and educational tools that will actually work for them and be more beneficial than using a pay day lender.
Some individuals are skeptical of these actions by the banks, the low-income individuals being targeted now are the same individuals who were targeted for subprime lending. This could also be a part of the banks’ long term strategy: bringing lower income individuals into the fold now, while hoping to be able to offer lines of credit and other profitable banking services later. Regardless of intention these financial institutions have been receiving praise from regulators, and we should support these changes and push them to do more.
These actions from the banks stress the importance of Responsible Banking Ordinances. Having a local legislative measure to encourage and ensure community reinvestment is key to the development of all eight wards of the District. Bruce Murphy, KeyBank head of corporate responsibility says this about the current surge in responsible activities by financial institutions: “Being the right thing to do has a short shelf life.” We should not let responsible banking be a fad for banks, but an ongoing focus and goal. A Responsible Banking Ordinance would help ensure that.