In the latest sign of the U.S. banking industry's eagerness to cash in on the fast-growing Hispanic market, Bank of America Corp. has quietly begun offering credit cards aimed at illegal immigrants.
In recent years, banks across the country have begun offering checking accounts and, in some cases, mortgages to the nation's booming ranks of undocumented immigrants, most of whom are Hispanic. But these immigrants generally haven't been able to get major credit cards, making it hard for them todevelopacredft history and expand then' purchasing power.
The new Bank of America program is open to people who lack both a Social Security number and a credit history, as long as they have held a checking account with the bank for three months without an overdraft. Most adults in the U.S. who don't have a Social Security number are undocumented immigrants.
The Charlotte, North Carolina, banking giant tested the program last year at five branches in Los Angeles, and last week expanded it to 51 branches in Los Angeles County, home to the largest concentration of illegal immigrants in the U.S. The bank hopes to roll out the program nationally later this year.
The credit cards involved come with a high interest rate and an up-front fee. The idea of catering to illegal immigrants is controversial.
Bank of America defends the program, saying it complies with U.S. banking and anti-terrorism laws.Company executives say the initiative isn't about politics, but rather about meeting the needs of an untapped group of potential customers.
"These people are coming here for quality of life, and they deserve somebody to give them a chance to achieve that quality of life," says Brian Tuite, Bank America's director of Latin American card operations, one of the architects of the program.
Critics say Bank of America is knowingly making a product available to people who are violating U.S. immigration law. "They are clearly crossing the line; they are actually aiding and abetting people who broke the law," says Ira Mehlman, a spokesman for the Federation for American Immigration Reform, which advocates a crackdown on illegal immigration.
"Ifs unfair that the bank is offering to extend credit to illegal immigrants, without the same background information required of the rest of us," Mr. Mehlman said. Typicalofthenewcard's customers is Antonio Sanchez, a Mexican immigrant whose only major asset is a white 1996 Ford Thunderbird, which he drives to the two restaurants where he works each day on opposite sides of Los Angeles.
To obtain a card with a $500 line of credit, Mr. Sanchez had to put down $99. If he stays within his $500 limit and pays his balances in a timely fashion, he will receive his $99 "security payment" back in three to six months, and his credit limit might be increased. The variable annual percentage rate charged on Mr. Sanchez's card is 2L24%, higher than the nationwide average interest rate of 18.1% charged by banks on unpaid balances, according to the Nilson Report, an industry newsletter based in Carpinteria, California.
David Robertson, publisher of the report, says a rate of 21.24% is "unquestionably high." "If that's the rate you're offered, it's a pretty safe bet you're in a high-risk group," he said. To assess an applicant, the bank employs "judgmental lending," a concept pioneered by MBNA, the credit-card company that Bank of America acquired in January 2006. In essence, the bank based its evaluation of a potential client's credit worthiness on a subjective review by its employees, rather than on standardized financial data crunched by a computer.
Such strategies may be crucial to Bank of America's long-term success. The bank, which in the past has grown principally by buying up other banks, is bumping up against a regulatory cap that bars any U.S. bank from an acquisition that would give it more than 10% of the nation's total bank deposits. That means Bank of America, which operates in 31 states and the District of Columbia, must increase its business by selling more accounts to existing customers and marketing products to attract new ones.
Bank of America, the second-largest U.S. bank after Citigroup Inc. by market capitalization, estimates that 28 million Hispanics are in its operating area and that most dont have a bank.
"If we don't disproportionately grow in the Hispanic [market]...we aren't goingtogrow"asabank, says LiamMcGee,BankofAmerica'scon-sumer banking chief. Illegal immigrants have typi-callyreliedonloan sharks and neighborhood finance shops for credit.
But that has begun to change. A few years ago, a handful of community banks in the U.S. began offering mortgages to illegal immigrants, as long as they could prove they had stable employment and paid U.S. taxes with an individual taxidentifi-cation number, or FTIN. In December 2005, Wells Fargo & Co. began extending mortgagesto consumers with an FTIN. The bank is currently evaluating a pilot program in Los Angeles and Orange counties before deciding whether to expand it.
A handful of retailers, such as Los Angeles's closely held La Curacao department-store chain, have increased their business by cultivating illegal immigrants with store credit cards. "Once you capture them, they become very loyal," says Ron Azark-man, chief executive of La Curacao, which has developed its own credit-rating system. The average APR charged by the company is 22.9%.
In selling the card, the biggest challenge is to persuade immigrants who are sometimes wary of credit that holding a credit card is a crucial step on the way to obtaining loans for big-ticket items such as a car or even a home. Pictures of a check book, credit card, car and house in ascending order illustrate this concept in one pamphlet in Spanish and English entitled "How to build your credit, step by step."
Many of the Spanish-speaking account holders who come to teller Luz Quintanilla's window at Bank of America's East Hollywood branch already have a Social Security number and regular credit card with the bank. But she suggests in Spanish that "maybe you have family or friends who don't have a Social Security number but wish to build their credit."
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Sapendo molti tra gli scrittori e i lettori di questo sito provenienti da Venezia e zone "limitrofe" (nel gergo di mia madre: la "terraferma", equivalente a tutta l'Italia continentale), la lettura vale i minuti di tempo. Non vi tedio con la riproduzione, tuttavia e' disponibile su qui.
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