Financial Services: Industry Update
November 2009
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Why Is Organized Labor Suddenly Taking an
Interest in America’s Big Banks?
Fairly or not, America’s commercial
than 2 percent of all financial services
banks have been vilified by many as the
employees are unionized. However, the
cause of the nation’s financial meltdown.
declining rate of union membership in
The CEOs of America’s most venerable
the United States has forced big labor
financial institutions have been called
to reevaluate itself and to develop new
to Washington and excoriated by an
strategies for increasing its ranks. One
angry Congress, and on talk shows
strategy was to change the balance of
across the nation their salaries have
power in Washington. Putting people
been contrasted with those of hourly-paid
in the field and contributing millions of
financial workers. The new administration
dollars, labor helped create and increase
has called for tighter regulation of the
Democratic majorities in both houses
financial sector and even appointed a
of Congress and elect the President.
“pay czar” to review the compensation
The president of one union interested
structures of banks that have received
in the financial industry, the Service
bailout funds. While most of the attention
Employees International Union (SEIU),
over the banking crisis is focused on
virtually emptied the union’s coffers to
whether, and to what extent, the industry
effect this political change. One prize for
is in need of reform, far less attention
organized labor in this political gambit is
has been placed on the veritable “perfect
the realistic opportunity to turn into law
storm” the current political and economic
the so-called Employee Free Choice
climate has created for unions eager to
Act (EFCA), any version of which would
make inroads into an industry that has
greatly facilitate the ability of unions to
been largely untouched by big labor.
organize blue- and pink-collar workers.
Consider the current circumstances
Irrespective of EFCA, however, the
facing unions. They are in desperate
banking crisis presents organized labor
straits. Unions represent less than 8
with another opportunity. Those watching
percent of the employees in the private
closely are aware that big labor already
workforce. With an eroding manufactur-
has placed some of America’s largest
ing base from which to draw support,
financial institutions in its crosshairs.
they need new members from untapped
Unions like the SEIU have initiated “cor-
sectors of the economy…people in
porate campaigns” around issues that
stable jobs. Historically, unions have
are seemingly peripheral to traditional
never focused on the financial industry
organizing goals, such as advocating
as a source of membership. Less
for consumer protection and executive
pay reform. These campaigns reach
Sachs, a recipient of government
Over time the union’s rhetoric will
out to all of the bank’s constituents
bailout funds.In September, SEIU’s
focus more and more on employee
through the press, the Internet,
Burger testified before the House
issues, both real and imaginary.
regulators, analysts and the courts
Financial Services Committee in a
Simultaneously, relentless and
in an effort to paint the bank (and its
hearing on the need for the creation
damaging corporate campaigns send
executives and board members) in a
of a Consumer Financial Protection
employers a blunt message: hand over
poor light as a business, an employer
Agency. In her testimony, Burger cited
your employees and the pain caused
and a corporate citizen. The purpose
worker accounts of being forced to
by the campaign will stop. In this way,
is to put enough pressure on the
engage in deceptive practices with
big labor can work to organize banking
business to bludgeon it into agreeing
investors. Finally, numerous “advocacy
employees, expecting EFCA to make
to something the union wants: usually
groups” descended upon the annual
that task easier and, at the same time,
an agreement to organize employees
ABA convention in Chicago at the end
attempt to “organize” banking employ-
without a vote (card check) and without
of October and demanded “a banking
ers by pressuring them into agreeing
employer interference (neutrality).
system that puts the American people
to card check and neutrality agree-
first.” The SEIU and its supporters
ments in exchange for the cessation
have built upon this effort, staging
of bad publicity and further attacks.
protests at the offices of several major
Unions have used this tactic before as
banks and even going so far as to dis-
recent civil RICO suits by Smithfield
play a “Wanted” poster with the picture
Foods, Cintas and Wackenhut against
of the CEO of a major investment bank
big labor unions demonstrate.
Earlier this year, the SEIU circulated
a petition calling for the resignation of
the CEO of one of America’s largest
banks. The union also took credit
for his ouster as chairman of the
company’s board of directors after a
shareholder vote at the company’s
annual meeting. And, in an October 8
letter to pay czar Kenneth Feinberg,
during one of these protests. SEIU’s
website lists several large banks as
targets for potential future actions.
Whether or not big labor follows
through on its apparent intentions,
financial services institutions are well
SEIU Secretary-Treasurer Anna Burger
So why are unions taking a front seat
served to evaluate the potential impact
demanded that Treasury strip the CEO
in the fight to reform America’s banks?
on their business and employees of
of his retirement package. Burger’s
Banks have what unions want…
union organizing. They should con-
letter also demanded that, as recipi-
thousands of back-office employees
sider now whether they are prepared
ents of federal funds, “...banks commit
in well-paying, stable jobs. Some
to respond to organizing efforts which
to: Allowing employees to negotiate
commentators have opined that these
may loom on the horizon. Identifying
compensation practices….” The SEIU
actions are big labor’s first step to
and addressing concerns about work-
now is attempting to influence the
organizing the financial sector. Indeed,
ing conditions or benefits can eliminate
selection of the firm’s new CEO by
emails have been discovered in which
the employee discontent that a union
calling on the public to write to its new
union and ACORN officials discuss
would seek to exploit in an organizing
chairman and to demand the hiring
the prospect of organizing bank
drive. In addition, careful thought as
of a CEO “who will put the interests
workers “since the banking industry
to how a union might attempt to mis-
of Main Street above Wall Street.”
is now being infused with billions of
represent certain business practices
taxpayer dollars.” A closer look at all of
as examples of corporate, social or
these actions reveals what may be a
legal irresponsibility, and preparing a
two-pronged strategy. First, by taking
strategic public relations response, can
credit for the removal of a CEO whom
reduce the effectiveness of a corporate
the union labeled as reckless or for the
campaign. One thing is certain:
passage of legislative reform, unions
waiting to act until a union knocks at
will be able to tout their importance
the front door could easily be too late
and value to the rank-and-file banking
for any response to be effective.
Organized labor’s interest in the financial industry stretches out to seemingly
unconnected investments and
affiliates. The SEIU, for example, has
staged demonstrations outside Burger
King stores in Boston. Why? According
to the union, because Burger King
has opposed passage of EFCA and
because it is owned by Goldman
2
employees, who until now may not
have considered union representation.
Financial Services: Industry Update
Hunton & Williams Labor Policy Task Force Contacts
Atlanta
Houston
Miami
San Francisco
Kurt A. Powell
[email protected]
Holly H. Williamson
[email protected]
Juan C. Enjamio
[email protected]
Fraser A. McAlpine
[email protected]
Charlotte
Los Angeles
Norfolk
Washington, DC
Wood W. Lay
[email protected]
Laura M. Franze
[email protected]
James P. Naughton
[email protected]
Susan F. Wiltsie
[email protected]
Dallas
McLean
Richmond
David C. Lonergan
[email protected]
Thomas P. Murphy
[email protected]
Gregory B. Robertson
[email protected]
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