SEIU said on Tuesday that executives at big U.S. banks and their allies "will stop at nothing" to block financial reform. Singling out B of A, the group says banks pushed employees to hawk dubious financial products, such as "no-doc" mortgage loans. "What happened is we started hearing from bank employees who told us that they don't like how things happen at work and who complained that there's a lot of pressure on them to sell bad products," said Stephen Lerner, who heads SEIU's financial reform project, in an interview. The solution is to unionize bank employees to give them more say over how businesses are run, he said. That would not only empower workers, but also support financial reform by helping curb misbehavior by financial companies.
Historically, labor groups have made little headway in organizing banks. Only a dozen or so U.S. banks are unionized, according to investment boutique Griffin Financial Group, accounting for less than two percent of all bank employees. During the 1970s, unions such as the Office & Professional Employees International Union tried to penetrate banks by urging depositors to withdraw their funds from non-union institutions, among other tactics. Yet apart from a few small banks -- mostly in the Midwest -- such efforts failed to take hold.
The reasons were largely social. In the 1960s and 1970s, working in a bank was viewed by many people as a ticket into the middle class. Tellers and other lower-level bank employees were reluctant to jeopardize their jobs by seeking to join a union. Bank work is also less grueling than the kind of blue-collar manufacturing sectors where unions typically flourished.
It's clear why banks, like many other companies, oppose unionization. Griffin Financial, citing estimates by one unionized bank, said in a March report (not available online) that the combined salary and benefits of a union workforce are 7-8.5 percent higher than those of non-union industry peers. For the bank in question, that amounted to roughly $80,000 per branch. Dealing with a union also introduces other potential challenges, such as having to negotiate employment contracts and work rules. In addition, unionized banks are regarded as poor merger partners. And of course, companies with organized workforces are more vulnerable to strikes.
Does SEIU have a shot at making inroads into the banking sector, given labor's previous struggles? You bet. Bolstering its chances is the considerable congressional support for EFCA, a bill that would let employees of banks and other companies join a union simply by signing a card or petition -- a much lower hurdle for membership than under current corporate practice.
EFCA has widespread support in the House and stands a good chance of passage in the Senate. And action is likely to come soon. The addition of Sen. Al Franken, D.-Minnesota, who along with many Democrats and President Obama strongly support the EFCA, should boost the bill's chances of passage in the Senate by bringing Dems closer to the 60 votes they need to overcome a possible filibuster by opponents. One source told me on background that he expects the bill to be introduced on the Senate floor this month. Still, some labor and banking experts are skeptical that unions will ever get traction in the financial industry. "Banks have historically been a stable, secure employment opportunity, and employees don't generally feel they need a union to represent them," said Peter Spanos, head of the labor and employment practice in Atlanta with law firm Burr & Forman, in an interview.
With unemployment soaring, many bank workers, even protected by pro-union laws, also may be afraid to rock the corporate boat for fear of angering management, Robert A. Bennett, formerly the editor-in-chief of U.S. Banker magazine, told me.
Yet Griffin Financial, in a confidential report analyzing the implications of the EFCA for banks, emphasized that the unionization "threat" is real. The legislation would, for example, make joining a union much easier by simply letting employees sign a card or petition.
Lerner is coy about saying how much progress SEIU has made winning over employees at BofA. The New York Post's Charles Gasparino says the union has been working to organize BofA employees for more than a year. If true, that underscores the tough slog SEIU faces in moving on other big banks.
Yet Lerner is undeterred, saying the political and social climate is right for banks to bear the union label.
"What's different now is that 80 percent of people blame banks for the economic crisis and see them as symbols of unbridled greed and bad business practices," he said. Stephen Lerner image courtesy of SEIU