I have to admit that the behaviour of bankers can sometimes make me a bit crazy. The implementation of the current small business support program in the US has driven me to new levels of insanity. This program was intended to help small businesses meet their payrolls at a time that they may not be open for business due to precautionary measures taken to prevent the spread of COVID-19. This program focused on providing loans that could be forgiven over time providing not only a helpful support for small businesses facing temporary challenges but also their employees.
The implementation of this program by many of the largest banks however shows that as usual there is limited consideration for the true purpose of the program but only a focus on staying within the rules of the program whilst supporting large businesses that have alternatives for finance. As reported in the New York Times, the behaviour of large banks has already led to lawsuits as it appears that they favoured larger customers over smaller customers.
Simultaneously several banks have taken funds provided to individuals for short term financial support to cover other outstanding obligations, in many cases to cover substantial fees charged by banks for overdrafts of accounts. These stories have been well covered in both the New York Times and the Washington Post. Whilst the funds being seized by the banks may cover amounts due to them or other bill collectors, I would think that the banks would consider the reputation risk of doing so. Especially as some of the amounts due to the bank may be resulting from abusive practices of the banks relative to fees charged to individual clients.
Both of these examples highlight the challenge for banks as they seek to rebuild their reputations. On the one hand large banks need to have standard policies and procedures to provide guidance to their staff in their daily work. On the other hand banks need to have a culture that focuses on meeting clients needs and supporting societal goals. I suspect that smaller regional and community banks are much better able to achieve that balance through their closer connections to clients and the communities in which they operate.
