The awareness of one’s social impact on one’s surroundings has considerably heightened over the past few decades. Not only are we now more conscious about our spending, but we are also careful about our savings.
Socially responsible investing follows closely after ethical consumerism. The next step is to take responsibility for the money you already have and its impact. Therefore, in addition to caring about where you invest, you must also consider where your investment is coming from.
Long story short, unethical banks prove to be counter-productive to your socially responsible investing. Understandably, there is only so much good you can do with the money that constantly facilitates socially harmful behaviors while sitting in your bank.
However, homework can go a long way in untying this pesky little knot. We have compiled a list of the most unethical banks in the USA frequently used by people, and it should help you stay up-to-date on where to keep your money.
But before we get to that, let’s try to understand what ethical banking is.
What Is Socially Responsible Banking?
We can define socially responsible banking as banking that prioritizes the comfort of its customers while supporting meaningful social causes. Socially responsible banks usually work based on environmental, social, and governance (ESG) principles to create a better world.
The heightened social awareness of the masses has led them to prefer ESG-oriented banking over the past few years. With the wide variety of banking options available today, it is exceedingly easy to quit one bank and shift to one that is more aligned with your cause.
Moreover, many banks have updated their policies to fit nicely into a socially responsible environment. Being unethical means losing business. Therefore, the shift towards socially responsible banking can be due to more reasons than one:
- Supporting ESG causes that the bank values
- Retaining customers with these values
- Attracting new customers
- Pressure from investors
- Remaining relevant in an increasingly aware society
However, no matter the cause, banks are moving towards socially responsible and ethical practices at an increasing rate. Consequently, those left behind are often the most unethical banks concerned more with unfair profits than ESG values.
What Makes a Bank Unethical?
Unethical banks are hardly ever concerned with repurposing their strategy to ensure the money goes towards the right causes. They are easy to spot because of a lack of certification and poorly constructed policies for consumer comfort.
So, before we get to our list, let’s look at some ways to quickly determine whether a bank is socially responsible.
How to Spot Responsible Banking Practices
Ethical banks make sure to keep their policies transparent and open to critique. The only way to improve is to stumble and learn, and most responsible banks learn with the social trends.
Moreover, such banks tend to engage only with ventures that benefit society. For example, a bank that facilitates investment in a firearms business is hardly staying socially responsible. Unethical banks are also the least concerned with community betterment policies.
What Are the Signs That My Bank Is Socially Responsible?
Here are a few signs your bank is consciously taking responsibility for societal good:
- Ethical lending practices
- Ethical investment
- Lower fees to facilitate all members of the community
- Higher savings with minimum profit mongering
- Insured deposits
- Loaning to the financially vulnerable
- A well-laid feedback system
- Regularly updated policies
What Are Some Certifications That Ensure Socially Responsible Banking?
In addition to these practices, some certifications make it easy to figure out how ethical a bank is. Here are a few examples:
- B Corp certification to ensure that the bank is legally obligated to consider the impact of its actions on the community and the environment
- Community Developed Financial Institutions or CDFI certification to ensure the revitalization of the economically debilitated sectors
- The Global Alliance for Banking on Values or GABV certification ensures a bank is building its policies by ESG values
The Most Unethical Banks In the USA
Knowing what banks to trust with your money and your morals can go a long way in making the right impact. We have compiled a list of the most corrupt banks in America for you.
These are the banks to avoid if you wish to bank with integrity and responsibility.
Bank of America
The Bank of America is the giant of all banks. This bank is the first on our list of unethical banks, and rightfully so. Founded in San Francisco in 1998, the Bank of America continues flourishing despite its thinly veiled fraudulent and corrupt policies.
Although federal law prohibits any firm from holding more than ten percent of state deposits, Bank of America holds twelve percent. Moreover, it controls seventeen percent of all home mortgages.
The list of its unethical practices is unending, including:
- Perjury
- Draining state pension funds
- Bankrupting clients
- Destabilizing unions
- Backstabbing both investors and depositors alike
The Bank of America is continued success indicates a governmental bias. The government has been recorded as funding the bank with taxpayers’ dollars and pulling it out of the trenches upon the slightest slip multiple times.
As Rolling Stone aptly puts it, the bank is a “hypergluttonous fraud ward of the state whose limitless fraud and criminal conspiracies we’ll all be paying for until the end of time.”
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HSBC Holdings
The next on our list of unethical banks is HSBC. HSBC is another bank that checks all the boxes of unethical and socially malicious banking. In addition, the bank extends support for multiple oppressive and corrupt movements, of which we are just able to scratch the surface.
For example, the bank has facilitated Palestinian oppression by financing weapons businesses supplying equipment to the Israeli armed forces. Moreover, It has publicly supported Chinese oppression in Hong Kong.
On the environmental front, HSBC continues to be one of the companies financing the Amazon crude oil extraction operations. The bank has gained a reputation for profiting from fossil fuel extraction and exploitation.
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Wells Fargo and Company
Wells Fargo and Company has recently been involved in a scandal that exposed its fraudulent activities, and it has paid for it in terms of a destroyed reputation.
The bank has admitted to creating as many as 3.5 million fake bank accounts. Moreover, it later tried to cover up this fraud by holding an ethics workshop, a move that was exposed and backfired spectacularly.
In addition to this, Wells Fargo and Company also confessed that they had massively overcharged mortgage fees, stealing money from its customers that they never needed to pay.
Not only that, but it also sold auto insurance to customers who didn’t need it. As a result, many customers suffered by having their cars repossessed.
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Citigroup Inc.
Citigroup recovered somewhat after the crisis it faced about a decade ago. The bank was exposed for violating multiple Federal Housing Administration (FHA) policies using fraudulent mortgage practices.
However, Citigroup continues to raise red flags owing to the causes it supports. Citibank has been using the money earned from students at MIT to fund its criminal activity. It has funded deforestation in the Californian Redwoods and the Amazon rainforests, thereby contributing to the displacement of millions of indigenous people.
Moreover, these practices extend worldwide, as is evident by Citigroup’s role in the construction of the Three Gorges Dam in China.
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JPMorgan Chase
Unethical banks have always had trouble with financial transparency. JPMorgan Chase is no different. A tremendous blot on the bank’s integrity has been a lack of concern for its investors’ credibility.
In 2012, the bank was implicated in a financial nondisclosure of $4.4 billion. The bank failed to mention this massive trading loss in its annual report. Moreover, JPMorgan Chase has admitted to extensive market manipulation over the years.
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Barclays
Barclays’ insults towards the environment and its political loyalties make it another big player in our list of unethical banks. For example, Barclays is one of the significant financiers of coal mining in Bangladesh. This led to so many issues, such as:
- Loss of living space
- Heavy metal poisoning
- The increased rate of disability and premature death of millions of babies
Without Barclays’ funding, this coal mining operation would not be able to go to completion. Barclays has also supported projects like the Amazon deforestation on the environmental front. Moreover, it does not have a clean slate regarding humanitarian policies.
Implicated in the construction of the Dakota Access Pipeline in 2016, Barclays continues to disrespect indigenous rights. The bank is financing similar projects in the US that impinge on indigenous lands.
Citizens Financial Group Inc.
Citizens Financial Group is on our list of unethical banks due to its lack of accountability. Over the years, the bank has received many complaints regarding poor customer service.
This customer service deficit is not limited to delays and non-transparency. Worryingly enough, the bank doesn’t respond to customers’ queries but directs the calls elsewhere. Moreover, the bank is notorious for providing inaccurate information on credit reports.
This avoidance of accountability puts Citizens Bank on our list of banks to avoid.
U.S. Bancorp
U.S. Bancorp is another bank that has failed to be transparent about its finances. The bank was implicated in running a five-year deliberate anti-money laundering program.
Not only did it willfully overlook many shady transactions, but it also never improved its money laundering policy. These practices facilitated money laundering to a dangerous extent, and the bank concealed this fraud by providing incomplete records.
The bank was ordered to pay $613 million in a court settlement for these money-laundering violations. Therefore, U.S. Bancorp rightfully makes it on our list of unethical banks to avoid.
SunTrust Banks
SunTrust Banks has recently earned a bad reputation due to its erratic policies regarding same-sex marriage. The masses have now come to believe that the bank will support anything as long it gets customers from it – a view that can be a massive blotch on the company’s image.
On top of that, SunTrust has a reputation for freezing deposits and withholding funds, leaving most customers unable to access the money in times of need.
We are unsure whether this is an administrative issue or whether something corrupt is cooking under the surface. However, our advice is to keep your distance.
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Possible Solutions to Unethical Banking Behaviors
We know what you are wondering about. What are the possible solutions to banks’ unethical behaviors? Well, the important thing to remember is that such magnanimous change does not occur overnight.
Unethical banks have flourished for decades due to governmental and organizational support for their corrupt practices. Unwinding this system would take hard work.
However, we can start solving this moral issue on two levels.
What Can the Customers Do?
Well, the answer is right here. Customers can do their research on unethical banks and their policies. Withdrawing from such banks and opening accounts in socially responsible banks is a more impactful move than one might imagine. It forces the bank to reevaluate its policies.
What Can the Banking Sector Do?
The banking sector’s role in shifting towards ethical practices involves large-scale moral recalibration. Not only must they cultivate a sense of civic responsibility, but they must also be willing to reject unethical policies.
A shift is only possible if banks are willing to use their dominant position in economically vulnerable areas for betterment instead of profit-mongering. Banks need to start implementing an ESG integration framework in their policy-making process.
The Bottom Line
Making a difference is not always about big moves and hefty claims. It can often start with something as simple as your bank account.
With enough socially aware people making the right choices, unethical banks lose their standing. Consequently, the harmful narratives they support also lose significant backing.
We hope you found this article helpful in your journey towards socially responsible banking.
FAQs
Is JPMorgan Chase ethical?
JPMorgan Chase is a financial services company headquartered in the United States. In recent years, it has been involved in several high-profile scandals, including the 2012 London Whale trading scandal and the 2020 criminal charges for market manipulation. While the company has tried to improve its ethical practices, it remains a controversial topic among consumers and industry experts.
Can Chase Bank be trusted?
Chase Bank is a financial institution that provides its customers a range of banking and financial services. As a large, established bank with a long history, Chase has a reputation for stability and reliability in the industry. However, like any bank, trust ultimately depends on individual experiences and personal opinions of customers.
Which banks to stay away from?
It is important to research and consider a bank’s reputation and track record before opening an account. Some banks have been known to engage in predatory lending practices, charge excessive fees, or have a history of fraud.
What is an example of an unethical Bank?
An example of an unethical bank is Wells Fargo. Wells Fargo has been involved in numerous scandals, including creating millions of unauthorized customer accounts, charging unnecessary fees, and discriminatory lending practices. These unethical actions have resulted in billions of dollars in fines and legal settlements for the bank.
