Calling Big Banks to Account
Thousands of protesters converged on Chicago last week to demand banking reform, challenging bankers gathered at the annual meeting of the American Bankers Association. Chanting "the bankers got bailout, we got sold out," the protesters, representing unions and community and religious organizations, called banks to serve their communities, not just themselves.
Chief among the protestors' complaints was large banks' "too big to fail" rationale for why they needed (and now need more) government bailout money. "Bust up big banks" read protestors' signs, trumpeting that their patience with big banks has run out. Protestors also called for curbs on executive salaries, an end to lucrative bonuses, restored consumer lending, and reasonable credit card interest rates.
AFL-CIO President Richard Trumka addressed the bankers inside the hotel where they met:
You work for us -- not the other way around. Your job is to be stewards of our savings -- to put and keep working families in homes, to lend the money companies need to create jobs. And you have failed. You've turned the American economy into your own private casino, gambling away our financial future with our money, driving us to the brink of a second Great Depression, then sticking out your hand for taxpayers to bail you out.
And bankers, let me tell you this: We didn't put you back in business so you can pay billions in bonuses to the suits; those bonuses have to go. And we didn't put you back in business so you could pile money and lobbyists into Capitol Hill to fight the financial reform we so desperately need -- while we're losing jobs, losing our homes, losing our retirement savings, losing it all -- because you treated the money we worked so hard to earn like Monopoly money.
While big banks claim that the protestors' demands are unrealistic, banks that have already been putting responsible limits on executive compensation and addressing other issues the protestors raised are being ignored in the discussion. Banks around the world have been proving for decades that they can attract good leadership and turn a profit, while at the same time keeping executive compensation at reasonable levels and lending to their clients at affordable interest rates.
For example, the annual sustainable banking awards, given by the Financial Times and IFC, recognize banks and other financial institutions that "have shown leadership and innovation in integrating social, environmental and corporate governance considerations into their operations." One of the characteristics of these institutions is their reasonable executive pay. Another is affordable lending interest rates.
This year's winner of Sustainable Bank of the Year, announced at the June 4 gathering of more than 250 bankers and sustainability leaders at the Renaissance Chancery Court Hotel in London, was the Triodos Bank of the Netherlands. In other categories, Itau Unibanco of Brazil won the Emerging Markets Sustainable Bank of the Year, MicroEnsure of the U.K. won the Achievement in Basic Needs Financing Award, the Global Environment Fund of the U.S. won Sustainable Investor of the Year, and Root Capital of the U.S. won the Achievement in Banking at the Bottom of the Pyramid award. The winners were selected from 117 entries from 42 countries, and runners-up and regional winners were also honored.
Banks honored at this gathering, as well as banks such as Wainwright Bank in Boston and the banks that constitute the Global Alliance for Banking on Values, all demonstrate that sustainable banking, with curbs on executive pay and lending to customers at reasonable levels of interest, is possible.
American banking is in a crisis worse than any since the Great Depression. The big banks would have us believe that the only two choices are further bailouts that prop up their overspending or economic collapse. But there is another way. May American banking admit its failures and look to these quiet role models, both in the U.S. and abroad, to forge a new path to sustainable banking.
Margaret Benefiel, Ph.D., author of Soul at Work and The Soul of a Leader, works with leaders in health care, business, churches, government, and nonprofits to help them stay true to their souls. Visit her Web site.