U.S.-LABOUR: Union Takes On California’s Largest Bank Over Lending Practices

By IPS Correspondents Reprint | | Print |

Reese Erlich

STOCKTON, California, Jun 14 1996 (IPS) - A key U.S. labour union has launched an innovative campaign aimed at winning a bitter strike and pressing the state’s largest bank to stop discriminating against minority borrowers and loan more to businesses committed to the welfare of their workers and local communities.

Teamsters Local 601, consisting of 11,000 mainly Latina cannery workers, is complaining that the Bank of America, the state’s largest financial institution and one of world’s most important banks, is lending money to companies which are bent on cutting jobs, lowering wages, and reducing benefits.

At the same time, according to the union, the bank is consistently turning down loan requests from minority home buyers and small business enterprises which provide greater stability to the community.

In a report commissioned by the Teamsters, the union urges the Bank to adopt an “affirmative banking programme that would increase both home loan and consumer lending in minority and low- income communities, and the proactive financing of businesses which create or retain high-skill, well-paying ‘high road’ jobs.”

The Teamsters campaign, which centres on the Bank’s operations in the San Joaquin Valley around Stockton, comes at a critical moment for both unions and the growing debate over corporate responsibility.

Faced with declining membership, increased international competition for jobs, and determined corporate efforts to cut costs, many of the country’s biggest unions have opted for new leadership in recent years.

Many of these elected leaders have brought a much more aggressive approach to organising, including new tactics designed to gain support from community, environmental, and civil rights groups for union fights with companies.

These ‘corporate campaigns’ have put pressure on companies by playing on corporate sensitivity to negative publicity.

The Bank of America campaign represents a new twist on this approach, as some of the bank’s commercial customers — and not the bank itself — are the primary targets for strike action.

The Teamsters, the second largest U.S. union, want to pressure the bank to stop making loans to Diamond Walnut, a local food processor that hired non-union labour to replace Teamster workers who have been on strike since 1991 for higher pay and an end to discrimination against Latinos.

The union argues that the Bank of America is not behaving as a responsible corporation in two ways — by discriminating against minority borrowers in the Stockton area, in violation to U.S. civil rights law, and by financing corporations that cut wages, benefits, and jobs to boost profits.

In 1994, for example, Bank of America “rejected Latino customers 120 percent more frequently than whites, Asian-Americans 83 percent and African Americans 206 percent,” according to the Teamster study, which said the bank also disproportionately turned down loans even to high-income minority borrowers.

The Bank of American also has been “a banker for an employer demanding massive concessions in labour agreements resulting in dramatically reduced wages (and benefits) and large numbers of employees left with (little) or no insurance,” according to the Teamsters.

“These employers are transforming ‘high road’ jobs into ‘low road’ and in the end leading to the transformation of our communities from ones of prosperity to ones of despair,” the report says.

The Teamsters have formed a coalition of some 60 community groups aimed at pressing the bank to end its discriminatory lending practices and promoting affirmative banking.

The coalition wants to set up a community oversight committee to monitor and advise the bank on its lending practices.

“This group will be instrumental to guide funds where they are needed,” said Lucio Reyes, secretary treasurer of Teamsters Local 601. “Hopefully, Bank of America will realise they have to do the right thing.”

Bank of America has met three times with coalition representatives and has committed itself to further talks.

But bank representatives deny the charges of discriminatory loan practices and say they will continue making loans to struck companies. The bank maintains that it makes no distinction between “high road” and “low road” industries, and will make loans based solely on their profitability.

“We finance businesses that create good jobs in the community,” insisted Bank of American spokesperson Ross Yarrow.

But the bank can be pressured to change its position, according to Alan Fischer, head of the California Reinvestment Committee, a state-wide group that monitors bank lending practices.

He said the Teamster campaign is the first in California to combine a drive against redlining — the practice of not lending to minority communities — with pressure to settle a strike.

“It’s in Bank of America’s interest not to be associated with companies that treat its workers like Diamond Walnut,” said Fischer. “Will the bank see it that way or just as another business decision? It depends on how much pressure you can bring to bear.”

The Teamsters are bringing a lot of pressure. Many community groups have joined the effort so far, including the National Association for the Advanced of Coloured People, the American Friends Service Committee and local politicians.

La Juana Johnson, NAACP state communications chair, supports efforts both to stop redlining and end loans to struck companies, although she conceded some in the African American community may not see a strike by Latino workers as their issue.

“But let’s face it,” she said, “if it’s happening to immigrants, it’s happening to African Americans. So we all have a stake in this.”

The coalition has demanded that the bank make 150 million dollars available for loans to low-income and minority communities, a request the Bank has agreed to consider. The Teamsters, who had been regularly leafleting the Bank of America and had threatened a future boycott, have now withdrawn the leafleting as a sign of good-faith bargaining.

“We have accomplished quite a bit” already, said Teamster official Reyes. “We have to be careful that they deliver.”