Preview

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 true for 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.

“Banks have the resources to weather this storm,” said Nick Wiener, lead organizer with CBB, in an interview with the Prospect. “They can do more than they are to make sure workers get out of this OK.”

The Committee for Better Banks originated with bank workers seeking to have a greater voice, not only in improving their lot through pressuring on employers, but to hold to account the actions banks take on customers and build a better financial system. It’s a testament to the power the CBB has built that, when they presented a preview of the scorecard to the banks, several of them—including banks they had little prior relationship with—responded and sent information to improve their score.

“We were pleasantly shocked,” Wiener said. JPMorgan, CapitalOne, Bank of America, and Fifth Third were among those engaging. (Wells Fargo wasn’t.) “I think that’s a positive sign that they at least weren’t completely shut down on recognizing bank workers as legitimate stakeholders,” said Wiener.

Congresswoman Ayanna Pressley (D-MA) described the scorecard as “a vital tool in holding the big banks accountable during this crisis and pushing them to do more to protect the physical and economic health of our communities.”

Ultimately, CBB wants a sectoral union for bank workers. But in the near term, they have imported an idea from, of all places, Brazil. They heard from frontline workers at the Brazilian outposts of Santander that they formed a crisis committee among workers and managers, sector-wide, to lay out procedures and staffing levels at the bank. You rarely see such coalitions in the United States, but it would give certainty to anxious workers whose branches have confusing or vague policies. It could serve as a model to handle ongoing crises.

No banks have thus far committed to a crisis committee for the U.S. banking system. But the pandemic has shown banks making the impossible possible, Wiener explained. Initially, banks said telework was impossible for call centers, because calls had to be monitored. Then a bunch of workers showed positive tests for coronavirus. “Almost the next day they were able to telework,” Wiener said. “Workers were able to get laptops to work from home when the grocery stores couldn’t get eggs. When they are motivated, banks can move quickly and at a large scale.”

I was on Status Coup with Jordan Chariton talking about the dwindling days for federal relief and the next economic survival bill. Watch here.

Yesterday Marcia Brown wrote the ICE decision to require foreign students whose college classes have moved online only to leave the country. Later that day, the Trump administration rescinded the decision. Marcia did a follow-up report, and here that is.

Gabrielle Gurley has a great piece at the site today about the airflow on buses. A longtime bus driver now working with a transit union has devised an airflow system that protects passengers and drivers from breathing recirculated air and risking potential COVID-19 infection. It’s fascinating.
All of our coronavirus coverage is at prospect.org/coronavirus. And send me your thoughts and tips via email.

110. Yes, we’re at 110 days, and the leading candidate for the chair of the Congressional Oversight Commission, former chairman of the Joint Chiefs of Staff Joseph Dunford, dropped out of the running yesterday. Not only did Dunford have absolutely no experience with Federal Reserve lending or corporate bonds or any of the oversight issues involved, but he’s also on the board (of course) of Lockheed Martin, and decided that the job would be “incompatible” with such a commitment. So he has more integrity than Nancy Pelosi and Mitch McConnell, who had no problem with appointing a board member of a giant defense contractor to oversee a rescue program aimed at corporate titans like… a giant defense contractor.

What a scandal that this hasn’t gotten done yet. Once again, Pelosi’s main rationale early on for what Democrats got from the CARES Act was oversight. 110 days later, that oversight hasn’t even begun.

Perhaps nobody’s reputation after this crisis is more dubious than Andrew Cuomo’s. (New Republic)
Pretty good results from Moderna in its Phase 1 vaccine trial. (Axios)
The White House’s “Find Something New” campaign just drips with contempt for workers. (Associated Press)
The Trump administration has taken away the CDC’s power to collect state data on coronavirus, instead having states send it directly to D.C. (Gizmodo)
Do you think the $100 million the government has doled out for McKinsey advice on coronavirus response has been well spent? (ProPublica)
There couldn’t be a more irrelevant contretemps right now than the war on Dr. Fauci. (The Daily Beast)
Max Abelson’s coronavirus discussions with a billionaire are fascinating. (Bloomberg Businessweek)
A baby caught coronavirus in the womb, and recovered (so did Mom). (New York Times)