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Protests at US bankers' convention

This article is more than 14 years old
Delegates from the American Bankers' Association are not accepting the blame for the crisis, despite demonstrations from those who think otherwise
Bankers and protesters speak out in Chicago guardian.co.uk

America's bankers may not agree on much. But on one issue, they are entirely united. They refuse to become humble whipping boys, taking the blame from an angry nation for the global financial crisis.

More than 1,500 senior executives from banks across the nation congregated in Chicago this week for what was intended to be a convivial get-together to reflect on the most tumultuous period for finance since the Great Depression.

For its annual convention at the city's Sheraton hotel, the American Bankers' Association hosted a cruise down the Chicago river, an optional cookery lesson, a barnstorming speech by the former Republican speaker Newt Gingrich and a series of round-table sessions on "strategic solutions".

"Bankers care. This is not just a job for us, it's a calling," the ABA's chairman, Arthur Connelly, told the assembled financiers, under a stage set made of scaffolding to illustrate a "rebuilding" theme. "We want to make life better in our communities. In so many ways, it's about putting service above self."

The ABA's membership represents 95% of the US banking industry's $13.3 trillion (£8.1 trillion) in assets. Almost all banks with a high-street presence are members, from industry behemoths such as Wells Fargo and JP Morgan Chase to thousands of small-town banks with a handful of branches.

"Traditional banks are the solution to getting this country back on track," said Connelly. "Harming our industry harms the American economy."

Not everybody in America sees the banking industry in quite the same warm, sharing terms. Unions coached in around 5,000 protesters to set up what activists billed as the "showdown in Chicago". Among the disenchanted were victims of home repossessions and workers left unemployed by firms starved of credit, plus many people who have simply seen their retirement funds decimated by a plunge in markets during the financial crisis.

As the convention opened with a drinks reception on Sunday evening, activists tried to get inside, only to be blocked by security guards. They left, chanting: "We'll be back!"

Addressing a boisterous rally nearby, Dick Durbin, a Democratic senator for Illinois, condemned "robber barons" responsible for the credit crunch and called on ABA members to visit Marquette Park - a Chicago neighbourhood of "neat little brick bungalows" where, he said, they would find a foreclosed home on "every single block".

Protesters picketed the Chicago offices of Goldman Sachs and Wells Fargo, then gathered outside the ABA's convention venue waving placards including cardboard images of JP Morgan's chief executive, Jamie Dimon, and Bank of America's boss, Ken Lewis.

"The banks have basically gone wild. They did a lot to loosen the regulations keeping commercial banks separate from investment banks. While they make billions, I lose," said Kenn Bowen, who recently lost his job as a telecoms technician in Iowa. "When they get into trouble, they ask for taxpayer bailouts which the government is more than willing to give."

Inside the hall, a heavy dose of patriotism got events under way. Proceedings began with an opera singer belting out not just one but three US anthems in succession - God Bless America, America the Beautiful and the Star Spangled Banner. Quoting Ronald Reagan, the ABA's chief executive, Edward Yingling, told delegates: "A leader, once convinced that a particular course of action is the right one, must be undaunted when the going gets tough."

Yingling allowed that "a small, a very small minority" of banks may have "not done the right thing" by treating consumers unfairly but added: "Sometime soon, the noise will die down, the economy will recover and traditional banks will lead the way."

In the corridors between meeting rooms, most delegates were quick to point out that it was Wall Street investment houses, rather than local high-street banks, that packaged subprime mortgages into toxic derivatives and that continue to pay their traders multimillion-dollar bonuses. The likes of Goldman Sachs and Morgan Stanley do not belong to the ABA and, to some, they do not count as "banks".

"We feel we've had a lot of black eyes for things we weren't responsible for," said Lawrence Levert, a director of St Martin Bank, an 11-branch operation in southern Louisiana.

Scott Chambers, director of Oregon's First Federal Bank, said his institution wrote no subprime mortgages and did not even have a credit card business: "The term 'banker' is so broad. There are several different types of banks and, in my mind, many different types of bankers."

In the year to date, 106 small US banks have gone bust, weighed down by delinquent mortgages, bad consumer loans and defaults on credit cards. The industry points out that the Federal Deposit Insurance Corporation, an insurance provider funded by banks, has ensured that account holders' deposits are protected without any need for government money.

Larger firms, however, such as Citigroup and Bank of America, have been allowed to remain alive by sucking the emergency oxygen of public funding. And there were a few discordant notes. The FDIC's chairman, Sheila Bair, gave the assembled bankers a mild scolding for charging hefty overdraft fees and penalties: "We all want the public to trust banks. We don't want anyone to feel people are playing a 'gotcha' game with them."

Attempts by smaller banks to deny involvement in the crisis met with short shrift from George Goehl, executive director of National People's Action, a US-wide community activist organisation. Goehl said that industry players, large and small, have spent years arguing for lighter regulation which, he argues, led to a risk-loaded free-for-all.

"It really doesn't matter if they're community banks, credit unions or whatever. They've been lobbying against the most basic measures to protect consumers," said Goehl.

Since the beginning of 2008, the ABA spent more than $13m on lobbying according to the database Opensecrets.org. It is opposing the Obama administration's proposals for a new consumer financial protection agency which, bankers complain, will impose an "unnecessary burden" of paperwork on them.

But few in Chicago were willing to be apologetic about the industry's conduct. Asked whether bankers were overpaid, Gerry Noonan, president of the Connecticut Bankers' Association, invoked the windy city's favourite billionaire daughter.

"We're in the city of Chicago," said Noonan. "Ask Oprah Winfrey if she's overpaid."

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