Members of the Committee for Better Banks traveled to Washington DC to share with members of Congress a new report on the predatory lending practices by Santander Consumer USA, the largest subprime auto loan lender in the US.
Committee for Better Banks is an organization of bank workers and consumer advocates affiliated with the Communication Workers of America. Members of the committee are working to unionize the banking industry, like it is in Europe and South America, and to improve banking practices in the US.
One of the banks where employees are trying to organize a union is Santander and its consumer loan division Santander Consumer USA.
Life for bank workers like these can be precarious.
Their pay is low and much of it is based on commissions they receive from selling banking services and products that customers often don’t need and often can’t afford.
“We had to make a decision every day about meeting our need to have a job and an income or speaking up about practices that Santander has in place that negatively impact our customers,” said former Santander employee Jerry Robinson on the committee’s Facebook page.
The new report that committee members shared with members of Congress such as senators Elizabeth Warren and Sherrod Brown describes some of the practices referred to by Robinson.
According to the report, Santander’s pay and incentive system pressures its call center collection employees “to use aggressive collection tactics” taught them by Santander to convince customers to agree to changes to their loans without explaining the high cost of the changes.
Santander Consumer controls more than one-third of the subprime auto loans in the USA.
These are high interest loans made to auto customers with low credit ratings.
About 31 percent of all outstanding auto loans are subprime loans.
It’s not unusual for subprime customers to miss or fall behind on loan payments.
In 2015, 16.7 percent of Santander’s auto loans were delinquent.
When customers do fall behind, they call or are contacted by Santander collection employees working in call centers.
In some cases, customers falling behind on their loans are encouraged to refinance or extend their loans.
Doing so may reduce monthly payments but the fees and extra interest rates that result can substantially increase the cost of the loan.
Santander’s practices have recently drawn the interest of state attorneys general who are cracking down on predatory lending practices.
Santander in March paid $25.9 million to settle predatory lending suits filed by the attorneys general of Delaware and Massachusetts.
Massachusetts’ Attorney General Maura Healey told Bloomberg Markets that in one of the cases cited in her suit, a Massachusetts car buyer ended up owing $10,000 on a $750 vehicle loan.
When members of the Committee for Better Banks met with members of Congress, they told them that having a union at Santander would give the workers the collective power they need to oppose such predatory practices.
Having a union would also give them a chance to have a reliable and steady income.
Currently, if workers don’t meet their sales quotas, they could end up making the minimum wage or near it.
Most people think that working for a bank like Santander is a good middle class job, but many of these workers struggle to make ends meet.
According to a report by the Committee for Better Banks, “bank worker wages are so low that almost one-third of bank tellers receive some sort of public assistance nationwide.”
But it doesn’t have to be this way.
In Spain where bank employees including those for Santander are union members, the average bank employee’s salary is $15,000 higher than the national average wage.
After meeting with members of the Committee for Better Banks, Sen. Brown issued a statement about the report presented to him by Santander workers.
“The behavior outlined in this report is troubling and, if true, shows that predatory practices boost profits for banks and their executives while hurting customers and workers,” said Sen. Brown, the ranking Democrat on the Senate’s banking committee. “It’s critical (that) workers are empowered to speak out if their company is harming them or its customers, and I urge Santander to respect the rights of these workers to elect union representation that will give them those protections.”