Amalgamated Bank CEO: Banks Can Help “Alleviate Problems”

BIANNA GOLODRYGA, HOST: Well, U.S. Treasury Secretary Janet Yellen is rejecting recession fears, pointing to the strong labor market and easing inflation. Priscilla Sims Brown is the CEO of Amalgamated Bank, one of the only unionized banks in the United States. And she joined Walter Isaacson to discuss its commitment to social and economic justice, and the state of the economy.

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WALTER ISAACSON, HOST: Thank you, Bianna. And Priscilla Brown, welcome to the show.

BROWN: Thank you. It’s a pleasure to be here.

ISAACSON: We’ve been spending these past few months worrying about a recession, about hard landings, everything else. And last week, we got some great economic news. Inflation is pretty far down. Unemployment is down. As somebody who runs a great community bank, do you think we’re in for a soft landing in the safe economy now?

BROWN: Well, I won’t hazard a guess, Walter. Many have done it. But I will say that the indicators are good, not only those that you referenced, but also anecdotally what we’re seeing with our own customers.

ISAACSON: What do you say with your own customers? How are deposits going?

BROWN: Deposits are going well. We’re basically flat on the quarter, which in this environment is a good thing. But more importantly, we’re also seeing real encouragement among our own customers, a level of confidence that gives me hope.

ISAACSON: Do you think that they have the confidence to, like, take out loans, start businesses grow again?

BROWN: Yes, I do. I think — you know, in the case of our customers, we’re talking about changemakers, people who are doing good in the world. And whether that be related to climate or affordable housing, these are things — these are projects that are really critically important to our society, and our customers are as enthusiastic as ever about getting those things done.

ISAACSON: You’re talking about your customers being change makers, doing good, doing great projects. You’re 100-year-old bank and yet you’re a bank with a purpose. In fact, you’re a banker with a purpose. I’ve followed your career. Tell me why Amalgamated is different?

BROWN: Well, I’m glad you asked. It’s an exciting story. You’re right, Amalgamated was started by a group of clothing workers. They had formed a union that couldn’t be banked. So, they decided to start their own bank, and that was 100 years ago.

And for that long, we’ve continued to care a lot about workers’ rights, but we also care about the rights of all people who are — put in vulnerable positions. And so, we think about society and what’s best. And as a bank, where it’s appropriate as a bank, we get involved.

ISAACSON: And by getting involved, what do you mean besides traditional banking activities?

BROWN: Well, we also think about those things that financial services industry should and can do to alleviate problems in the world. And so, that started for us with climate and, quite a lot of work. A third of our lending is climate related or sustainability related. And we’d go from that to making sure that we are actively involved in setting the standards by which financial institutions report their activity, their past and net zero.

We have done something similar in terms of getting involved and, sort of, punching above our weight as it relates to things like women having access to reproductive health care, as it relates to eliminating the use of financial systems for gun crimes and other crimes. These are all things that we think are appropriate for a bank to do and we get involved.

ISAACSON: So, you say you got involved in all these things, reproductive rights, guns, everything else. To what extent do you have to say, we’re going to take a little bit of a hit on our bottom line or the amount of interest rates we pay?

BROWN: Well, look — you know, for us, the story is a pretty good one. 100 years, ago this was an experiment in how banking could be done well. How you could do good and do well. Now, 100 years later, we think the experiment is proven. And it’s proven for us in our earnings growth as a bank. So, what we do for shareholders but also as a B Corp, we care as much about what we do for other stakeholders. And so, we see the success of the strategy in the progress that our shareholder — our stakeholders make, including all of our customers.

ISAACSON: But do you think people are attracted to the fact that you are doing good and they want to be amalgamated for that reason?

BROWN: Absolutely, absolutely. Our customers tell us, they’d like to know where their money sleeps at night. And it’s — they are happy to know that it is sleeping in good places. They don’t, again, they don’t have to worry about whether we are doing something that is against their values.

This is aided by the fact that we are a subtransparent. And actually, Walter, I mean in that way, we are also — we also enjoy a luxury that many institutions don’t have. We don’t get as concerned as others may about any form of malcontent among customers because we are so transparent.

ISAACSON: There is a great book by Matthew Desmond called “Poverty, by America.” And one of the things in that struck me is that black or Hispanic families are five times more likely to be unbanked. What do you do? That’s part of the mission of Amalgamated Bank, to fight racial injustice and things like that. What are you doing in that regard?

BROWN: I am so glad you asked about that because I think it is incumbent upon us in the banking industry to be focused on the wealth gap. And that wealth gap for black and brown people is way too huge. And there are number of banks turned a lot about it. What we’re doing right now is a series of conversations with changemakers in this space and with individuals who are affected by this space to try to find where is the wide space? What is not being addressed?

We know that some of the institutional processes we have had in place for a long time, while perhaps not intending to be are certainly discriminatory. And we are having a discriminatory effect, I should say. So, we want to address that. And one of the reasons, frankly, that we are reporting this week very strong earnings and we are reporting great success is through the work that we are doing with underserved communities. Whether those be people serving this population, or whether it’s the population itself. One example of that is some of the investing we’ve done with funds that are specifically set aside for black and brown communities, and for entrepreneurs in those communities. Another thing that we think is really important is you’ve seen a number of larger banks and other asset managers. Setting aside specific programs to enable those who are coming into the workforce to have access to capital. We think access to capital, both that initial point when you try and buy your first home. And at the second point, which is when you’re trying to expand your business. You have seen success in your business in a limited way. You have lots of demands, you want to expand it. You don’t have access to capital to make that happen. We are looking at solutions to that problem.

ISAACSON: Let me read you a statistic that I find interesting which is that research shows that Americans in 2021 were charged $11 billion in overdraft fees, and nine percent of accountable there’s pay 84 percent of those fees. And those are customers who usually have balances of less than $350. That feels like attacks on the poor. You know, how can banks make sure that there isn’t attacks on being poor when you go to a bank and that the poor don’t get exploited?

BROWN: Look, I think there’s a lot in that answer. One is we have to educate people in the way they’re using these accounts. It’s a travesty if the fees you’re being charged on an account are multiples of the balance in your account. That means that you are using this account as a way of getting a payday loan, essentially. You are taking the money out, knowing in many cases, and we do see that there are people who do this in excessive number of times.

So, what’s happening is they need access to funds right away. They don’t have another access. So, they knowingly will create a situation where they are getting a feel for the use of that money, right? And that has to stop. We have to be able to educate people because whether you take the fee away or not, they are still not managing very well. And we have to provide education to assist in that. We do that not only indirectly, but we do that indirectly by supporting organizations that are providing that kind of information and education and literacy, financial literacy to customers. That is where it starts. It also has to continue through to our policies and practices on how we charge fees, and recognizing the problem and communicating with customers. This is another reason why community banks are so important because they know their customers and they have the opportunity to engage where they see there are issues.

ISAACSON: You say that customers love the fact that money is sleeping in a good place. Also, I assume it’s not sleeping in bad places. Let me take an example. They may not like money going to gun manufacturers or gun transactions. Tell me what you do in that regard?

BROWN: Well, you know, it’s interesting. I, like, almost every American, I have a number of legal gun owners as family members and friends and even in my own home. And so, we don’t take a position around whether or not a gun owner should be a gun owner. We think that Second Amendment is important. What we do though is we do want to see the eradication of using financial services systems to commit gun crimes, that’s the distinction that we made. And again, we think that’s the right swim lane for a bank. But right now, we have a problem in this country in that, in fact, it can happen anywhere around the world in that illegal activity using credit cards for the purpose of buying guns to do something wrong. It’s hard to identify. It’s hard for us to report this spacious activity to authorities, and so we’ve taken it upon ourselves to try and address that.

ISAACSON: In the past few days we’ve seen the earnings report from the big banks, they all come out in the past week. They did a little bit better, I think, correct me if I’m wrong, than expectations that looked pretty good for the big banks. Over the next week or two, we’re going to see community banks reporting. Is that a trend that’s going to continue or is this something special to the big banks this quarter?

BROWN: Well, it’s going to be hard — it’s hard for me to answer that directly. But what I will say is that we as a — we’re a bank that’s in four major cities. So, we’re considered national. But we do work all around the country. And we care lot about the smaller banks, the community banks that we also like to support. We think that they serve a very important purpose on Main Street in America. That this is the bank that supports the entrepreneurs, the local entrepreneurs and knows them very well. And I think whether you are a large money center bank, whether you are mid- sized banks like us, we’re 125th bank out of 4,000. Whether you are us, whether you’re smaller, or whether you’re larger, we need this ecosystem financing organizations to be able to sustain the economy and important ways. And so, we certainly hope to see very good results coming out of the community banks that will report. And you’re right, it’s sort of goes in order of size. You’ve seen some of the big banks’ report. You’ll see us and others reporting now, and then you’ll see the smaller banks reporting.

ISAACSON: This spring, Silicon Valley Bank, the First Republic Bank, failures, people will worry that this was going to hurt mid-sized banks and community banks. Yet things — have they stabilized? It seems they have.

BROWN: Well, I think what people are starting to realize is that this really is not about equating size with quality. In the case of Silicon Valley Bank, you have a fairly large bank that was affected, $200 billion. That’s not a small bank. And yet, I think initially — the initial reactions were that flight to quality met flight to size.

What people have come to realize, I think in the weeks and months have passed is that actually, what’s important is that banks are acting responsibly. That they’re making prudent decisions to protect their policy — I’m sorry, their shareholders and their customers. And so, that is what I think is starting to be reflected in the results that you are seeing from banks.

ISAACSON: We heard Senator Warren say right after — Senator Elizabeth Warren say after these problems with Silicon Valley Bank and others, that it happened because there weren’t enough correct regulations on mid-size, smaller and community banks. Is she right? Are there more regulations — you’re a mid-sized bank so you’re in the middle of those two things. Do you think the regulatory regime is correct at the moment? If not, how would you fix it?

BROWN: Look, I think the process of regulating financial institutions is always a dynamic process. There are always going to be changes in the economy and changes all around us that will affect what is important to do from a regulatory perspective. Whether that be esoteric new instruments coming into the marketplace which banks have to decide whether or not to participate in, whether that be economic forces both the U.S. and global affecting the progress of a bank towards its own aspirations around risk and growth. These things are happening all the time. And I can only tell you that we are regulated by four entities, and all four of them are quite actively engaged in looking at how to adjust to these dynamic changes.

ISAACSON: Let me ask a personal question. Your family is from Ethiopia, I think from — whatever I’ve read (ph). You grew up military — U.S. military bases in Germany. You really didn’t spend a lot of time in the United States to come until you were about age 14. And you said, that’s when you experienced racism for the first time. Tell me about that and how that affected your career?

BROWN: Actually, the first time I understood that there was racism was when I was coming to the U.S. for summers, and I came when I was nine years old. And I just had an experience where someone reacted to me because of my race.

How does that color my experience? Look, I think we’re all acutely aware of who we are and we bring our identity into everything that we do. The way it has colored me is that I understand that race and other artificial symbols that we carry around and are there for us don’t tell the full story. And it doesn’t tell my full story, and I know it doesn’t tell your full story.

So, my job is to make sure that in the role that I play every day, I’m looking beyond these things that are artificial. And it can be race, it can be age, it can be gender, or it could just simply be the style of someone’s communication.

So, I — that is my job. My job is to make sure that I am getting past those and trying to find a way to bring people together to talk through issues with very different perspectives. It is also color, the way that I show up. I make it a point to show up just as I am. I make it a point to talk the way I talk, to correct myself when I find myself being a bit of a chameleon and acting like others. I also think it’s really important for me to acknowledge where these issues have impacted me and if it impacted others, and where I call it out where I see it happening.

ISAACSON: Priscilla Brown, thank you so much for joining us.

BROWN: Thank you. It’s great to be with you, Walter.