BofA banks on illegal immigrants
IT’S REALLY NO WONDER that Bank of America has been quiet about its new initiative in the Los Angeles area to offer credit cards to customers without Social Security numbers or credit histories — including illegal immigrants. After all, just hours after the Wall Street Journal reported on the program, CNN anchor Lou Dobbs chastised the $74-billion banking giant for its “outrageous policy,” called its spokeswoman an idiot and hinted ominously that the new credit cards would stoke terrorism, money laundering and forgery.
In fact, BofA’s program, which issues small amounts of credit at relatively high interest rates to checking customers in good standing, shows how markets adjust to deal with reality, even when politicians and nativist TV commentators want to remain in denial. BofA recognizes that the 28 million Latinos in its market are here to stay, and it is targeting financial products to suit their needs and help them continue to boost local economies.
Over the last few years, large banks have stepped up efforts to attract business from new immigrants, especially Spanish speakers. Many sell bank accounts and mortgages. BofA, known as the Bank of Italy when it was founded in San Francisco by Amadeo Giannini in 1904, made headlines in 2005 when it eliminated transfer fees for checking customers sending remittances to Mexico. It markets its credit card program, which debuted in five Los Angeles branches last year and expanded last week to 51 local locations, as a great way for newcomers to build credit.
The push has little, if anything, to do with grand political gestures. It’s about profits. “If we don’t disproportionately grow in the Hispanic [market] … we aren’t going to grow” at all, consumer and small-business banking chief Liam McGee told the Journal. Executives like McGee understand that courting Latinos is more than just a way to pick up a few new customers here and there. It’s a way to tap into a huge engine of economic growth. According to a recent study by the Center for an Urban Future, a New York-based think tank, L.A. County leads the nation in the number of Latino-owned (as well as Asian-owned) firms. More to the point, the study also reported that about 80% of L.A.'s new entrepreneurs were immigrants.
The nation’s dysfunctional immigration policies have forced many of today’s hardworking immigrants, and tomorrow’s successful entrepreneurs, to lurk in the shadows, undocumented. But there is no reason that a market-driven enterprise eager to grow should ignore this population.