Banking from the Shadows: Does the Texas banking industry discourage undocumented customers? The answer might surprise you
For Fernando, buying something on eBay was the first time he felt like an American.
His sister told him to open a bank account when he was a senior in high school because he needed an account to shop online.
It was a simple transaction – routine to the teenagers he grew up with in border towns in South Texas. But for the undocumented immigrant, it was one of many reminders that his status was different.
He remembers the Bank of America card with his name embossed on it more than he remembers what he bought.
“It legitimizes you,” said Fernando, now an immigration attorney in Fort Worth. He agreed to speak with the Dallas Business Journal under the condition that his actual name not be revealed.
Click the slideshow to see the nation's top unbanked cities and the nation's top underbanked cities.
Many undocumented immigrants believe they can’t open banking accounts, fearing the bank will flag their status to law enforcement or that they’ll simply be turned away.
Instead, many rely on cash, which leaves them vulnerable to being robbed. They also are preyed upon by payday lenders and other credit services with high fees.
What most people don’t know is that banks, especially those in Texas, quietly recruit undocumented Hispanic customers. The banks assure that all a customer needs to open an account is their passport issued by another country or a U.S. tax identification number.
Bankers interviewed say they never ask about citizenship status. The industry as a whole is agnostic on the immigration issue that played a central role in the election of Donald Trump as president.
Trump will sweep into the White House next month on the promise of building a border wall with Mexico and accelerating deportations of some 11 million undocumented immigrants in the U.S. – with an estimated 1.5 million in Texas alone.
Those communities say the powerful banking lobby should stand up for them.
“They do have an obligation to have a stance,” Fernando said. “They are stakeholders. We are their clients.”
‘We don’t find it risky’
As a boy, Leo Lopez translated for his mother when she tried to open an account in Dallas. Now he is vice president and bilingual branch manager in the Bank of Texas Dallas office near Farmers Branch.
The Hispanic Chamber of Commerce member helps locals who are “unbanked” open accounts.
He doesn’t know how many accounts Bank of Texas has opened for undocumented immigrants, as the bank doesn’t ask. But he said about 75 percent of their Hispanic customers opened their accounts using a passport.
“There isn’t any more risk for them [as opposed to] anyone else,” Lopez said of customers who aren’t in the country legally. “There is an opportunity to give more access to those who are unbanked.”
Lopez confirmed that banks rarely know a customer’s immigration status. They aren’t required to take that information and it’s not often volunteered.
But Fernando did tell Bank of America. He said a younger generation of undocumented immigrants, many of them brought here as children, are eager to open bank accounts and build credit. Some banks, he said, even offer mortgages to undocumented immigrants to buy a home here.
“We went and said, ‘We’re undocumented. What can we do?’ ” he said. “They were very friendly.”
Bank of America declined to comment for this story and instead directed questions to the American Bankers Association, the industry’s main lobbying arm in Washington, D.C.
“Banks don’t track whether or not someone is legally in the U.S.,” said ABA’s Senior Counsel Rob Rowe.
He said the group hasn’t lobbied on the immigration issue and doesn’t plan to do so.
Pushing lawmakers for a more progressive stance on immigration may jeopardize their influence over which banking rules will be relaxed.
Republicans have pledged to dismantle the 2010 Dodd-Frank law, which was put in place after the banking crisis to make the system safer and prevent future bailouts by taxpayers.
Additionally, policymakers haven’t required banks to determine whether their account holders were in the country legally. “It’s something that’s outside the banking industry,” Rowe said.
At Bank of Texas’ Dallas office, the firm’s senior vice president and consumer regional manager for DFW East Scott Bishop, spokeswoman Jacquie Donovan and Lopez paused when asked if the bank or the industry as a whole should take a stance on immigration.
They declined to answer, but said they welcome undocumented immigrants as clients. In the event that account holders are deported, their funds are not seized under current law, and their debit cards and other services will still work, they said.
“Because we’re in that industry of risk, we don’t find it risky to bank folks that are undocumented,” Bishop said.
‘He won’
Fernando didn’t watch the election results come in. He went to bed early when his brother texted, “he just won Florida,” referring to Trump’s collection of electoral college votes in the Sunshine State.
At 2:11 a.m., Fernando got another text from his brother: “he won,” then later, “wtf just happened?”
Fernando’s status in the Deferred Action for Children Arrivals program is now in jeopardy. He was brought to the U.S. when he was 7, and his parents overstayed on their visa. They had owned several furniture stores in Mexico, but when the economy turned south, they moved north.
His mother cleaned houses and his father mowed lawns. With the stroke of a pen, Trump could eliminate the DACA program, which has provided a haven for roughly 700,000 immigrants, including Fernando and his brother.
The phones in Fernando’s office have been ringing constantly since election night. Many are clients Fernando and his colleagues had lost touch with. They’re now hurriedly calling back, hopeful to move their immigration cases forward.
Some are new clients wanting to squeak into the program while it’s still active, but Fernando said they’re not sending in new applications. They don’t want to put the addresses of undocumented immigrants into the system in the event there are raids.
It’s unknown what Trump will do. He has indicated there could be mass deportations, but has also signaled that those with a criminal history would be deported first and the rest taken on a case-by-case basis.
Many economic experts say allowing immigrants to stay will benefit Texas and local banks.
Helping the economy
Foreign workers immigrating to the state – legally and illegally – have made up roughly 40 percent of the state’s labor force growth between 1990 and 2010, Federal Reserve Bank of Dallas President Robert Kaplan said in a Nov. 7 speech.
Kaplan defended the influx as “substantially beneficial” to the economy and pointed to research that showed immigrant workers are more likely to file patents and are more entrepreneurial with higher rates of self-employment.
As the Mexican economy has rebounded, more Mexicans are leaving the U.S. than migrating here, according the Pew Research Center.
In total, about 9 percent of the Texas labor force is undocumented.
Dallas-based nonprofit Transformance helps undocumented immigrants open banking accounts, making it easier to enter the immigration system. But Transformance CEO Ken Goodgames hesitated to say whether Trump’s immigration policies would hurt the economy or the banking industry.
“There is always a possibility that with a new administration the existing policies would change,” he said.
Banks are eager to attract more customers as profit margins have shrunk since the financial crisis.
About 70 percent of new accounts are opened in banking buildings, though few customers ever go inside a physical location again. This means that banks must still maintain the costly real estate of their branches in order to boost new accounts.
Wells Fargo tried to stay profitable by opening fraudulent accounts for existing customers, resulting in a recent $185 million fine, a Justice Department investigation and the resignation of CEO John Stumpf.
But there are still new account holders who can be recruited.
About 14 percent of residents in the City of Dallas are unbanked, according to a nonprofit project of the Corporation for Enterprise Development. Another 21.7 percent are “underbanked,” meaning those who have a banking account but have resorted to using other financial products such as payday loans.
Despite the uncertainty surrounding immigration policy, Fernando has chosen to remain stoic with his clients.
He finds comfort in going about his day-to-day duties as any other American would, such as paying his bills with his bank account and keeping up with his credit score.
After the election, Fernando was on a conference call with other immigration attorneys. He was told that if his work status was revoked, it could cost him the law license he earned earlier this year. He’d wanted to be a lawyer since before his family moved to the U.S.
After the phone call, he shut the door to his office and cried.
“I felt like I had accomplished the American dream,” Fernando said. “Until now.”
What's the minimum documentation you need to open a bank account in Texas?
Undocumented immigrants can open a bank account if they provide:
- Proof of their name
- Billing address
- Names can be presented with a passport, a consular ID, or even a Texas ID if the account holder has qualified for one
- An identification number (A social security number isn’t required. Banks will accept an ITIN, or an individual taxpayer identification number, which is issued by the IRS.)
Jon Prior covers finance for the Dallas Business Journal.
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