Banks Keep Breaking Their Promise to Serve the Public Good

Banks play an outsized role in our communities, for good and bad.

They can provide much-needed capital to small businesses looking to hire more workers, loans to first-time homebuyers dreaming of building wealth for their families, and protection to consumers seeking a safe haven from high-cost check cashers and payday lenders.

But they’ve also excluded, gouged, and discriminated against small businesses, consumers, and entire communities. And through their lobbying and litigation campaigns, they often exert an undue influence on the laws and policies designed to protect everyone.

Banks exercise this influence both in their own names and through their trade associations, like the American Bankers Association and the Chamber of Commerce.

While many banks have vowed to use their influence for the public good, they’ve been aggressive in attacking key civil rights, consumer protection, and environmental justice measures that would bolster communities and protect us all.

For example, banking institutions have challenged the Consumer Financial Protection Bureau’s determination that discrimination — such as when a customer is denied a bank account due to their race — is an unfair, deceptive, and unlawful practice.

They’ve challenged a small business lending transparency rule that will expose discrimination against small businesses owned by women, people of color, and LGBTQ people, help close racial wealth gaps and other inequalities, and promote equal access to credit for everyone.

Even now they’re challenging new federal Community Reinvestment Act rules that would encourage banks to increase lending and investment in working class communities. And they’re lobbying and litigating against policies requiring corporations to disclose their financing of greenhouse gas emissions and their impact on our environment.

Banks and their trade associations even went so far as to challenge the constitutionality of the Consumer Financial Protection Bureau, the agency with the sole charge to protect consumers from financial exploitation — and which has returned billions of dollars to harmed consumers.

Unfortunately, the list of harmful and outrageous bank attacks on our protections continues to grow. And the Supreme Court just invited even more outlandish challenges to rules designed to rein in industry excesses.

In overturning the Chevron doctrine — which required courts to defer to expert federal regulators when implementing our laws — the Supreme Court’s conservatives have opened the floodgates to legal challenges by scofflaw corporations that don’t like the rules they’re supposed to follow.

But banks do not have to accept this invitation.

The ruling will only harm communities if federal regulatory agencies retreat from doing their job to implement our laws — and if banks and other corporations continue to challenge reasonable rules that protect consumers, small businesses, and communities.

That’s why over 100 nonprofit organizations recently sent letters to 40 bank CEOs calling out harmful industry lobbying practices and asking: Which side are you on?

These groups, including my organization, are demanding that banks conduct a biennial audit of their lobbying to determine if their deeds match the promises they’ve made to use their influence responsibly and better serve communities. If there’s misalignment, banks should take action, change their lobbying practices, and leave any trade groups that don’t represent their stated values.

Unless of course, banks agree with their lobbyists when they challenge rules protecting civil rights, community investment, and climate justice. Banks cannot have it both ways.

The good that banks do through loans and investments to underserved borrowers, small businesses, and communities is overwhelmed by the harm they’re doing in challenging critical rules that protect the most vulnerable and uplift us all.

Now more than ever, it is important that banks play a responsible role in our democracy. Will they?

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