Occupy Wall Street’s anger at banks stops at Amalgamated
The Occupy Wall Street movement has led many banks to hire extra security. Manhattan’s Amalgamated Bank has rolled out the red carpet.
The bank, owned by the Workers United labor union, has emerged as the unofficial financial institution of the anti-Wall Street movement.
Even people who hate banks, it seems, need a bank.
“It was quite obvious we were not going to open a Bank of America account,” said Wylie Stecklow, who serves on Occupy Wall Street’s finance committee. “But we had to deal with banks if we were going to process funds.”
Amalgamated is where the Occupy Wall Street movement has about $326,000 in donations deposited, or about two thirds of the total raised by the New York arm of the movement, according to its finance committee. When things have heated up, as they did when protesters were temporarily evicted early this week, the bank has provided support, including storage space and conference rooms, and has kept tellers around after hours when protesters needed money.
But even banks trying to change the world get drawn into the less attractive corners of Wall Street. Amalgamated made some controversial investments in California subprime mortgages and recently gave a 40% ownership stake to some of the same private equity titans that Occupy Wall Street has been protesting against.
“First and foremost the bank has to be a bank, and has to be and should be a successful bank,” said the bank’s chairman, Noel Beasley, who is also the head of the Workers United union.
Ed Grebow, the bank’s CEO, is a former private equity manager himself, coming to the bank from J.C. Flowers & Co., a global private equity firm run by billionaire investment banker Chris Flowers.
More recently, though, Grebow has been out on the streets of New York protesting during marches aimed at denouncing the banking industry.
“I’m trying to show personally that you can be a bank, but also be supportive of progressive values,” said Grebow, who occupies a corner office in midtown Manhattan that is sparsely decorated with old union trinkets.
The tension between upholding progressive ideals and operating in a world mesmerized by money has been a growing issue for Occupy Wall Street. It has come up in the movement’s incongruous effort to trademark its name, and in debates about accepting donations from business leaders.
In California, the Oakland encampment confronted the contradictions when it begrudgingly deposited $20,000 in a mega bank — Wells Fargo — while it waited for a credit union account to open.
But these tensions are brought into particular focus at Amalgamated. Founded by the Amalgamated Clothing Workers of America in 1923, the bank has a long history of trying to bridge the chasm between capitalism and labor.
In the early days, the bank existed to provide services to immigrant workers whom other banks avoided. Amalgamated has continued to cater to those customers, with things such as free checking accounts and branches in working-class neighborhoods that are underserved by other banks.
The bank has grown to 27 retail branches focused mostly in New York, with other locations in Pasadena, Las Vegas and Washington.
But along the way, the bank has also added some of the more complex financial products that have gotten other banks into trouble — including a commercial loan division and a relatively new unit focused on making private equity investments.
Grebow says with each of the bank’s operations there is a careful effort to only support projects that its union partners would agree with.
“We talk a lot about what we need to do to be a bank that has good business practices,” he said.
When the protesters on Occupy Wall Street’s finance committee journeyed to meet Grebow at the bank’s midtown headquarters, they liked what they saw.
“He’s a very regular dude,” said Pete Dutro, who is one of the members of the committee that is handling the movement’s money. “He definitely had the air of authority that comes with a bank CEO. He came across as one of us.”
But even Grebow acknowledges that it has not always been a smooth ride.
The thirst for profit led the labor-backed bank, like many conventional institutions, to invest in the doomed subprime mortgage market. It bought $212 million worth of high-risk mortgage loans issued by Calabasas-based Countrywide Financial, which imploded and nearly failed during the financial crisis before being bought by Bank of America.
That not only proved to be a toxic investment, but it also put Amalgamated in a tricky situation in which it owns mortgages that are being foreclosed on by Bank of America.
The $150 million in losses sustained by Amalgamated on real estate investments led to the most controversial move by the bank. It sought $100 million of fresh capital from two private equity kings — Los Angeles supermarket magnate Ron Burkle and billionaire investor Wilbur Ross. In September they announced that they each plan to take a 20% stake, but the deal must still be approved by banking regulators.
While Burkle is famous for working hand in hand with unions at the companies he owns, Ross has a more checkered history. He has cooperated with unions in the steel and auto industries but is also the subject of intense criticism from the United Mine Workers of America. The union claims that Ross shut unions out when he owned West Virginia mining company International Coal Group, and was indirectly responsible for the Sago Mine disaster that killed 12 in 2006.
Phil Smith, a spokesman for the mine workers union, said Ross “doesn’t seem like the right guy to have a big stake in a union-friendly bank to me.”
Ross and Amalgamated executives both point to his more friendly relationships with most of the other unions he has worked with.
“We are totally comfortable working with unions in general,” Ross told The Times. “Unlike some of the private equity firms that have had very serious conflicts with unions, we have never had a strike in any of our companies.”
Even aside from the particulars of Ross’ past with the mine workers union, Amalgamated’s partnership with private equity still raises eyebrows in the Occupy Wall Street crowd.
“Those guys want to get in on everything so that they have total control over everything,” Dutro said of the private equity industry.
But Dutro and others on the committee said they have raised their concerns with Amalgamated and are confident in Grebow’s ability to uphold Amalgamated’s historic values.
For his part, Ross told The Times he doesn’t necessarily agree with all of Amalgamated’s political work, but he thinks its alliance with unions provides a good business model.
“I myself have no intention of marching as part of Occupy Wall Street,” Ross said, “but I also have not the slightest intention of interfering with [Grebow’s] decision to do so.”
Amalgamated has developed a reputation for finding ways to use its involvement in the financial system to help progressive causes. It lends to real estate projects that hire union labor. And it runs the LongView mutual funds, which use their shares in big public companies to push for changes at those companies through shareholder resolutions.
Beasley, the union leader who is chairman of Amalgamated, said such shareholder activism enables the bank to deal with the contradictions involved in investing in companies it might not otherwise agree with.
“It’s a contradiction that exists and you can either embrace it and use it to your advantage, or you can turn away from it,” Beasley said.
