WASHINGTON — Congress' passage of a provision allowing some applicants with criminal records to obtain jobs in the banking industry is being lauded by banks and some advocacy groups for formerly incarcerated persons, but others question whether the move goes far enough to address the problem of reintegrating formerly incarcerated persons back into society.
In the midst of an ongoing labor shortage, the banking industry pushed for the inclusion of the Fair Hiring in Banking Act into last year's defense spending bill. The law amended Section 19 of the Federal Deposit Insurance Act to modify a ban on banks' ability to hire people with criminal records.
Though some second-chance advocates criticize it as a half-measure, the move was celebrated by banks and some advocacy groups as a positive, if incremental, step forward for
"One to three Americans has some type of arrest or conviction record, which creates a significant barrier to employment for 70 million people across the country," said Nan Gibson, executive director at the JPMorgan Chase PolicyCenter. "So that is a huge talent pool that could be tapped to build job openings where we have operations and branches."
Section 19 of the Federal Deposit Insurance Corp.'s statute "prohibits individuals that are convicted of certain criminal offenses from participating in the affairs of an insured depository institution without the written consent of the FDIC," according to the agency. Aspiring Bank employees with criminal records may apply to the FDIC for a Section 19 waiver, independently, or with a bank's sponsorship, however, the onerous and lengthy process to do so discourages many with records from even applying.
The new law furthers steps
The new law also sets a maximum "look-back period" wthin which criminal offenses may affect an applicant's eligibility. Applicants to Banks can now bypass the Section 19 waiver process if seven years or more has passed since the offense occurred or, in the case of ex-prisoners, five years or more have passed since the individual was released from incarceration. Additionally, conduct committed before age 21 and that received sentencing at least 30 months prior to the job application is also exempt from waiver requirements. Finally, people with criminal records that have been expunged, sealed, or pardoned are also exempt from waiver requirements.
Gibson said Section 19's overly broad scope unfairly hurt minor offenders who had long learned from their mistakes. She indicated that the new law could provide reformed individuals the chance for a successful career, while still maintaining the agency's goal of preventing criminals from infiltrating the banking system.
"If someone use[d] bad judgment when they were young, like using a fake ID, but they haven't done anything since then, under the old rules, they would have had to report it for the rest of their lives," Gibson said.
Civil rights groups also lauded the provision, saying the new law is an important step that will allow some ex-convicts to more effectively re-integrate into society.
"A criminal record should not be a lifelong punishment, but for many people it is — unjustly limiting opportunities for jobs, housing and economic security," said ReNika Moore, director of the ACLU's Racial Justice Program. "Because communities of color — especially Black communities — are overpoliced and incarcerated, denying jobs based on old or minor criminal records only worsens racial economic disparities. We welcome policy changes that support re-entry by reducing discriminatory and arbitrary barriers to employment."
Mark Drevno, founder of Jails to Jobs, a nonprofit that helps the formerly incarcerated find employment, said reforming Section 19 has a variety of benefits for both potential employees and banks' images in the communities they serve.
"Having DEI initiatives can make banks more attractive to potential customers who want to do business with companies that are more diverse and inclusive and work to improve the communities where they are located." Drevno said.
But some others say the law doesn't go far enough. Televerde, a multinational sales and marketing company, has been helping formerly incarcerated women gain employment since the late nineties. A spokesperson from the organization said the law's emphasis on waiving Section 19 for exceptionally low-level and prescriptively 'rehabilitated' ex-convicts leaves intact practices that have long perpetuated hiring disparities that make it hard for ex-convicts to reintegrate into society.
"We are delighted that the FDIC is taking a step to support a clear path to second-chance job opportunities within the U.S. banking industry," Televerde said in a statement. "It's unfortunate, however, that the conditions outlined will continue to limit opportunities for most justice-involved women and men. We'd love to see the FDIC take its commitment to second-chance hiring further by removing conditions for employment because removing one big roadblock but putting up a bunch of smaller ones in its place doesn't support this community in the ways they need to be supported."
Consumer advocates had a variety of reactions, noting that in addition to being the right thing to do, FDIC allowing banks more freedom to practice second-chance hiring may help some in the industry curry favor with liberal government officials.
"A justly convicted felon should not continue to pay a penalty beyond what a court has assigned, such as through exclusion from employment at a major business sector," said Bartlett Naylor, a financial policy advocate at Public Citizen. "Moreover, our judicial system has proven racists, unjustly incarcerated persons of color disproportionately, meting out unequal sentences and otherwise prolonging America's ugly legacy of slavery.
"It's possible that Biden's Warren-inspired financial regulators are [Community Reinvestment Act]-minded, and bankers are so catering," he added.
Whatever the law's intent, bank industry watchers agree that financial institutions have slowly begun to see the potential benefits of progressive practices like second-chance hiring. Todd Phillips, principal at Phillips Policy Consulting and a former FDIC attorney, characterized this trend as mostly practical, but acknowledged that such practices are a good look for institutions.
"I think banks are facing a tight labor market right now, just like every other industry in the country," Phillips said. "There are a lot of other businesses that have been able to expand their worker pool by looking at individuals with criminal records, and I think banks want to be able to do the same thing."
"In addition," Phillips continued, "supporting this does give them some cover, saying that they are undertaking DEI community supported actions, but I think it's mostly that they want to expand their labor pool."
