You don't have to read beyond the jacket of this book to know that Carol Greenwald is a force to be recokoned with: Phi Beta Kappa, a Ph.D. in economics, the first woman officer of the Federal Reserve Bank of Boston; at 31, commissioner of banks for Massachusetts, a post she held for four action-packed years, and now the first president of the National Consumer Cooperative Bank, a new federal agency that lends to consumer cooperatives.
This book is her remorseless front-row report on how banks are shortchanging the consumer in subtle and damaging ways, how our whole banking system is out of tune with the times and how our bank regulations are inefectual, dimly understood and poorly enforced. With that out of the way, she outlines what she thinks should be done to set things straight, and gives practical tips on how to protect your interests until the banks are back in line.
This is a forbidding lot of ground to get over unless you're training for it, but having already battled the bankers in the field in support of her views, Greewald brings a Ralph Nader-like fevor to her pages that makes the subject at least as approachable as your morning paper -- and the print won't come off on your hands. There is, in fact, an introduction by Nader, which won't make many friends in banking circles, but that's not the constituency the author has in mind. She's talking to the rest of us out here, who stand in line at the teller's windows, limp and compliant, grateful if the bank doesn't bounce our check.
For openers, she describes the wheeling and dealing that goes on in the bank's back office, while the rest of us are waiting out front. As we've lately begun to learn, some people are more equal than others when the interst rates are handed out. Being president of a bank, or related to a bank president, or being a political figure the bank wants to do a favor for can make a difference in the size of the house you can afford to buy. Self-dealing, as this is called, is not necessarily illegal, but can easily become so, and regulations to stop the practice are seldom enforced. "The regulatory authorites have simply adjusted to the prevailing mores of the industry."
Bank employement practices are back in the Stone Age. Sixty percent of bank employes are women, Greenwald writes, but they are "crowded into dead-end, low-paying jobs." Women bank officers are mostly branch managers or in personnel departments, which can be called "in management" on the affirmative action forms, but is far from the real high command, where the tanker fleets are traded back and forth. Women are promoted more slowly than men and are paid less for the same work. The treasurer of a Connecticut bank, 62-year-old woman, who had been with the bank for 28 years, was paid $9,900 a year, while a 38-year-old assistant secretary treasurer, with the bank for seven years, got $16,900. Greenwald thinks some women are too embarrassed by the conditions they've put up with to protest about them.
Jews and Catholics hardly fare much better. In the New York City banks, "there are perhaps five Jews among the 345 senior officers, but not one Jew among the 22 officers who are also directors in the leading New York banks," she writes. In Boston, a predominantly Catholic city, there are "few Catholics among the senior executives at large commercial banks." In the savings banks, conditions are worse.
But in a sense these are only minor offenses compared to the way banks deal with consumers and the destructive effect of bank policies on society as a whole. Small savors are locked into low interest rates, while bank lending practices and outmoded criteria for determing property values have led to "disinvestment," or "redlining" in the inner cities.
Greenwald writes: "No one claims that the plight of deteriorating urban neighborhoods is solely the result of redlining; but no one believes that this deterioration can be reversed without a steady flow of capital into them. The thrift institutions are the mechanism society relies upon to insure that flow. They have failed to meet that responsibility."
On paper, some bank abuses have been corrected by laws passed in the last few years. But the main pattern of the nation's bank regulations was set half a century ago, in an effort to keep banks from collapsing as they did in the '30s. No one foresaw then that the cities would run out of money, or that double-digit inflation would wipe out people's savings, or that the traditional banking criteria for loans would effectively discriminate against anyone who deviated from the gray-flannel norm that had been the traditional image of a good credit risk.
In Greenwald's view, the entire regulatory system should be brought up to date, and the whole banking industry shold be reconstructed to be more responsive to the problems and aspirations of the communities it serves.
The bankers don't exactly get equal time in this recital, but they have the most powerful lobby in Washington and bank regulators are usually former bankers who go back into banking when they leave office, so they are well represented where it counts.
The text could use some sharpening and pruning, but its message is clear. If we're getting short shrift at the bank, it's our own fault.