Bank lobbyists are staying on the sidelines of the immigration-reform debate, but individual bankers are watching the action in Washington with keen interest.
The chief financial officer of one Illinois bank that was a target of anti-immigration protesters said Tuesday that it would not make any more home loans to undocumented immigrants until it gets "clearer legislative and regulatory direction."
And the chairman of Mitchell Bank in Milwaukee has contacted members of his state's Congressional delegation urging them to consider the impact any legislation would have on banks that target immigrants.
For five years, Mitchell Bank has catered to the undocumented Hispanics who have moved into - and transformed - its neighborhood, said chairman James P. Maloney.
A House bill, sponsored by Wisconsin Republican James F. Sensenbrenner, would make it a crime for any person or business to help illegal immigrants enter the country or help them stay here. Banks are not mentioned in the bill, but Mr. Maloney said he wonders if $81 million-asset Mitchell would be punished every time it opened an account for an undocumented immigrant.
Such a law would "make life impossible for banks that work with immigrants," he said.
Industry observers say the bill could also cause headaches for agricultural bankers - particularly those in California - whose customers largely rely on immigrant labor. Farmers unable to hire immigrants to pick their crops could have trouble bringing their crops to harvest and, conceivably, paying off their bank loans.
On the other hand, a Senate bill sponsored by Sen. John McCain, R-Ariz., might be a boon to banks that cater to immigrants. That bill, which the full Senate is expected to take up this week, would let illegal aliens who entered the country before 2004 earn citizenship if they pass a background check, pay a $2,000 fine, learn English, and work here for six years.
Mr. Maloney supports Sen. McCain's bill. He said many undocumented immigrants are reluctant to open accounts out of fear they will attract the notice of authorities, but that they might be more willing to do so if they became citizens.
"If we had an earned-path citizenship provision in the bill, it would solve all the problems, because people would be able to come in out of the shadows, get some documents, and start down the road to legitimizing their status," Mr. Maloney said.
Encouraged by their regulators, banks of all sizes over the past five years or so have allowed illegal immigrants to open accounts using identification cards issued by the consulates of their home countries.
For documentation on mortgages, banks can accept individual taxpayer identification numbers (ITINs) that are issued by the Internal Revenue Service to people who must pay taxes but are not eligible for a Social Security number.
Some of these banks have become targets of anti-immigrant groups. Last week two groups protested outside a branch of the $1.2 billion-asset Bank Calumet in Hammond, Ind., because it had done business with undocumented immigrants.
The bank was sold to the $7.2 billion-asset First Midwest Bancorp Inc. of Itasca, Ill., on Monday, and the attention has apparently spooked the new owner.
Michael L. Scudder, First Midwest's, said that Bank Calumet had made only made one loan to an undocumented borrower but that as First Midwest it would not be making any more for the time being.
"What we have elected to do is suspend the program pending clearer legislative and regulatory direction," Mr. Scudder said.
The Sensenbrenner bill passed the House in December, but it is unlikely it would ever become law as written. The Bush administration generally supports the more immigrant-friendly bill being considered in the Senate.
A spokesman for the Independent Community Bankers of America said the group had not taken a position on the bills. Calls to Bank of America Corp. and U.S Bancorp were not returned, and a spokeswoman for Wells Fargo & Co. said its government relations people were not lobbying on the bills.
James C. Ballentine, the American Bankers Association's director of grassroots and community outreach, said the ABA is watching the bills but has not taken a position, because the banking industry's concerns are not uppermost in the minds of immigrants' advocates.
"If we were in a baseball or football stadium, we would be in the cheap seats in the debate," Mr. Ballentine said. "I don't think we would get very much of a hearing on the issue." Nonetheless, he said he does not expect banks to start any programs or promotions targeting immigrants until Congress is done.
Mark T. Doyle, the chief executive officer of the $269 million-asset Second Federal Savings and Loan Association of Chicago, also opposes Rep. Sensenbrenner's bill. He said his bank has more than $90 million of loans to illegal immigrants and that research compiled by the Metro Chicago Information Center shows an opportunity to make $4.5 billion of mortgage loans in the Chicago area.
"The Sensenbrenner bill is just a reflection of the community of people who have no exposure to the impact immigrants have on their community," Mr. Doyle said.
Mr. Doyle said that in his work with the America's Community Bankers government relations committee he has voiced banks' concerns about immigration during every recent congressional visit.
Calvin Bellamy, the former chairman and CEO of Bank Calumet, said that if he had not sold the bank, he would continue offering services to illegal immigrants - largely because the federal government encourages banks to move immigrants into the mainstream.
"We're told by the secretary of the Treasury that it is better to have people in mainstream financial institutions rather than in the underground economy, we're told by the IRS that they are paying income taxes, and we have the banking regulators telling us there is nothing illegal about making these mortgages," Mr. Bellamy said.
