CHICAGO — Some 5,000 union members and community activists marched through downtown Chicago Tuesday, expressing public frustration with the banking industry – namely, what demonstrators charge is a lack of transparency and accountability regarding $350 billion in federal bailout money.
“What kind of recovery do we want to have in this country? Just for the guys at the top or everybody?” asks Tom Balanoff, president of the Service Employees International Union (SEIU) Illinois Council, who spoke at a rally during an American Bankers Association (ABA) convention here. “The banks got a lot of our tax money, and some of them seem to be recovering and certainly seem to be rewarding themselves greatly.”
The big bank-related news recently has been the latest round of corporate bonuses, adding fuel to protesters’ anger – especially with foreclosures continuing to rise. The industry should be doing more to help calm consumer anger by showing how the bailout money may, in fact, be working in the public’s favor, say some banking experts.
The current economic crisis requires a complex understanding of all the components that led to failure in the industry, says David Schweikhardt, an economist at Michigan State University in East Lansing.
Because large corporate lenders – as well as the Obama and Bush administrations – did little to create transparency, public suspicion grew and conspiracy theories have abounded, he says.“[They never said], ‘Here is why this was done, and why we think it is worth doing, and how we intend to eventually bring this game to an end’ – i.e., What’s going to be the plan for the repayment of this money,” says Mr. Schweikhardt.
Instead, the banks were given little incentive “to come forward to explain what happened or what will happen,” Schweikhardt says.
“They’re clinging to their lifeline of getting healthy enough to return to what they are doing – business as usual,” he says. “Unfortunately, I don’t see any way that the upper levels of large banking industry will do anything to explain this other than at the force of a congressional subpoena.”
A spokesperson for the ABA declined to comment on the protesters’ grievances, instead issuing a statement that said “bankers want smart regulation” and are looking to the government to fill “the gaps in the regulation of non-bank lenders.”
SEIU president Mr. Balanoff said neighborhoods in Chicago are decaying because of foreclosures, which increase the number of squatters and bring down property values.
“You see houses getting boarded up instead of the banking industry figuring out how to renegotiate loans because they make more money foreclosing,” he says. “Within weeks, whole communities unravel. When we talk about bringing back communities, it starts there.”
ABA officials say the protests are misplaced because it is largely community bankers attending the conference.
“You did not make any abusive subprime loans; you did not take big bonuses for products that later blew up,” said ABA President Edward Yingling during opening remarks Monday.
Mr. Yingling called the protest “misdirected” and said it was frustrating to have traditional banks lumped together with Wall Street firms that engage in risky trading practices and have taken billions of dollars in taxpayers funds.
Material from Reuters was used in this report.