Banking on illegal immigrants
A move to issue credit cards to people without Social Security numbers draws anger and praise.
By E. Scott Reckard, David Streitfeld and Adrian G. Uribarri
Times Staff Writers
February 14, 2007
Bank of America said Tuesday that it was issuing credit cards to Spanish-speaking immigrants who may not have Social Security numbers, triggering complaints that the nation's largest retail bank is tacitly endorsing illegal immigration.
The bank described the program as a pilot, limited for now to 51 branches in Los Angeles County, and said it could go national this year.
The credit cards are not aimed specifically at illegal immigrants, a bank spokeswoman said, but instead people who lack solid credit histories. Even so, the bank was bombarded with angry phone calls.
On Capitol Hill, Rep. Tom Tancredo (R-Colo.) accused the lender of aiding terrorists, while the Department of Homeland Security worried that the program could be exploited by criminals.
"At face value the program seems to be problematic," said Russ Knocke, a department spokesman. "It seems to be lending itself to possibilities of perpetrating identity theft or creating more risk for money laundering."
The bank's program may be controversial, but it also vividly demonstrates that businesses view the country's estimated 12 million illegal immigrants not as lawbreakers but as customers.
Other major banks including Wells Fargo & Co. and Citibank have launched similar initiatives to gain customers in the burgeoning Latino community.
Wells Fargo began a pilot program last year in Los Angeles and Orange counties to offer home mortgages to immigrants who have lived in the United States for at least two years. The customers are allowed to identify themselves using taxpayer numbers issued by the Internal Revenue Service instead of Social Security numbers. That's the same type of identification number an immigrant can use to obtain a credit card under Bank of America's pilot program.
Wells Fargo may follow Bank of America's lead on credit cards.
"We are also looking at the possibility of offering unsecured credit cards to customers who may not have Social Security numbers," Wells Fargo spokeswoman Mary Trigg said.
Although important for all major banks, the immigrant market is especially key for Bank of America. Though now based in North Carolina, the bank, once headquartered in San Francisco, still has its largest retail operation in California, home to a huge Latino population.
"Bank of America is the biggest bank for Hispanics in the country, and it made a decision a couple of years ago to keep pushing that market," including buying a 25% stake in a Mexican bank, said Richard Bove, a banking analyst for investment firm Punk, Ziegel & Co.
The emphasis may pay off, but "the political backlash is going to be substantial," he said.
That prediction seemed to be borne out Tuesday, after the program was reported in the Wall Street Journal.
"It helps to further embed illegal immigrants into American society," said Steven Camarota, research director for the Center for Immigration Studies in Washington, which backs stricter enforcement of immigration laws. "It makes amnesty a fait accompli."
Tancredo said he sent a letter to U.S. Atty. Gen. Alberto R. Gonzales and Department of Homeland Security Secretary Michael Chertoff asking them to look into the program.
"I hope the administration will shut down this reckless and illegal program before Bank of America extends a line of credit to a potential terrorist," said Tancredo, a hard- line foe of illegal immigration.
A Justice Department official declined to comment on the legality of the program.
Bank of America spokeswoman Alexandra C. Trower said the company complied fully with all banking and anti-terrorism laws governing customer identification, which she said permitted the use of taxpayer ID numbers instead of Social Security numbers.
Bank executives said participants needed another form of identification, such as ID cards issued by foreign consulates. Applicants must also have had a Bank of America checking account for at least three months.
William P. Cook, former general counsel of the U.S. Immigration and Naturalization Service, said the bank's program was neither illegal nor problematic.
"It's sad that such a forward-thinking move is being mischaracterized as if it were an improper activity," said Cook, who is now in private practice.
There's a serious issue behind the flap, said Gordon H. Hanson, an economist and immigration expert at UC San Diego. The federal government has been stalemated on the immigration issue for years, abdicating its role in defining rights for 12 million people, and Bank of America moved into the breach, he said. It couldn't make immigrants citizens, but it could make them customers.
"Are we undermining civil society?" Hanson asked. "That's an entirely valid question."
Robert Gnaizda of the Greenlining Institute, which lobbies for improved financial services in low-income neighborhoods, called the program "excellent news."
Immigrants with scant credit histories can buy houses only with high-interest loans. Getting a bank card helps them establish their credit and qualify for better mortgage rates, he said.
Potential customers also liked the idea.
Lionel Archila, 51, is a Guatemala native who arrived in Los Angeles after a dozen years in Canada. A former accountant, he works odd jobs as a handyman and construction worker. He sometimes goes days without pay.
"It's magnificent from a financial point of view," Archila, waiting for a bus in downtown L.A., said about the prospect for getting a credit card. "But I would use it for my basic needs. I wouldn't get caught in the trap of buying the latest TV."
Roberto Flores, a 55-year-old Angeleno who moved to the United States from Michoacan, Mexico, in 1975, long ago got comfortable with credit accounts. He has at least two: one at La Curacao, a department store catering to Latinos, and another at Home Depot.
He said life without credit could be difficult for struggling immigrants.
"Anything helps," he said.
Despite Bank of America's compelling interest in Latino markets, it was arch-rival Wells Fargo that kicked off the competition in 2001, when it became the first U.S. bank to accept identification cards from Mexican consulates to open an account.
Since then, Wells has opened more than 1 million accounts for Mexicans using the consular card. It also accepts Guatemalan, Argentine and Colombian identity cards. The assumption is that most immigrants using the cards to identify themselves are here illegally, Wells Fargo spokeswoman Trigg said, but the bank doesn't ask.
Citibank already issues credit cards to some immigrants without Social Security numbers if they have taxpayer identification numbers, spokeswoman Janis Tarter said. The bank issues such cards under its own brand and the brand of its subsidiary, Banamex USA.
Citibank began issuing the cards nearly three years ago. Tarter said she couldn't recall anyone complaining.
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