Amalgamated Bank, with just five branches across three cities, and a market value lower than the net worth of many an individual hedge fund honcho, would seem an unlikely mover and shaker in the world of Wall Street, let alone Washington, D.C.
Yet last fall, it successfully pressured colossal credit card companies Visa, Mastercard, and American Express to use the financial system to track and report gun purchases. Amalgamated is “more than a bank,” says Michael Watson of the Capital Research Center. “It’s a bank for an ideological movement.”
This “ideological” bank holds $7 billion in deposits and manages or maintains custody of some $51 billion. And while that sounds like a great deal of money, it pales in comparison to financial institutions such as JP Morgan, with its $2.4 trillion in deposits, or the $8.6 trillion in assets managed by BlackRock. But Amalgamated’s outsized influence doesn’t flow from the size of its coffers. Rather, it’s explained by its role as cue to the wider corporate world given the major sources of that money – the Democratic Party, progressive activist groups, and major labor unions.
During political election cycles, such as at the end of the third quarter of 2022, upwards of $1 billion – or 17% of Amalgamated’s total deposits – come from Democratic campaigns, political action committees, and state and national party committees. Amalgamated is the commercial banker for the Democratic National Committee, along with Joe Biden and virtually every other 2020 presidential contender, and congressional leaders like Rep. Nancy Pelosi. All told, Amalgamated serves more than 500 political organizations – in addition to adjacent groups such as Color of Change and the Sierra Club. As the New York Times said of Amalgamated, it is “the left’s private banker.”
The bank also works side-by-side with more than 1,000 unions, including the nation’s second largest union overall, the Service Employees International Union – alongside other behemoth government employee unions including the United Federation of Teachers and the American Federation of State, County and Municipal Employees. “[Y]ou might see us out there walking with” picketing workers, to whom Amalgamated provides “strike loans,” the company notes. The bulk of Amalgamated’s trust and investment management business comes from institutional clients, including union pension funds.
Amalgamated’s unusual position and nature distinguish it from other financial institutions that have embraced the Environmental Social and Governance movement (ESG), such as BlackRock and JP Morgan. Its deep ties to the Democratic Party and its support for liberal and leftist political causes may make it a new model for how progressive corporations, politicians, and activists can work together to push favored causes outside the political process.
Richard Morrison, senior fellow at the conservative Competitive Enterprise Institute, said Amalgamated can, at a minimum, “serve as an example for other managers and CEOs who want to make their mark as the most ‘enlightened’ players at the next big management conference or World Economic Forum annual meeting.”
As an admiring Andrew Ross Sorkin, the New York Times financial journalist, put it in a July 2022 conversation with Amalgamated CEO Priscilla Sims-Brown, “We’re at quite a moment, and your bank is a microcosm of so much of it.”
Taking Socialism to the Bank
Amalgamated has deep progressive roots. It was founded in 1923 by and for the socialist textile laborers of the Amalgamated Clothing Workers of America, and remains 41%-owned by their successor affiliate, Workers United, an affiliate of the powerful SEIU.
Over the decades, it has amassed an almost exclusively progressive client base to pursue a progressive mission. Its business positions the financial institution “at the vanguard in terms of ESG-aligned policy recommendations,” according to CEI’s Morrison. Amalgamated’s inherently political assets may help explain how it became a lightning rod in the ESG wars likely to intensify under a GOP-controlled House.
Amalgamated’s business flows naturally from its mission to promote “social and environmental justice in-line with stockholder return,” which is codified in its corporate structure as the first publicly traded financial institution to organize as a public benefit corporation. Embodying the tenets of ESG, this designation alerts shareholders that the company will seek “to promote social and environmental justice in-line with stockholder return.”
The bank’s mission is personified by management, such as former CEO Keith Mestrich, previously the CFO of SEIU. Mestrich accelerated Amalgamated’s drive into political banking over the last decade alongside several former Obama administration officials-turned-financial executives.
Amalgamated’s mission can be seen in the company’s internal policies, which include hiring formerly incarcerated workers, covering employees’ travel costs when seeking out-of-state abortions, and raising its minimum wage to $20 per hour, a first for any bank.
It is also reflected in Amalgamated’s position as the financial partner of the charitable Amalgamated Foundation, whose coffers have swelled, fueling its tens of millions of dollars in grants to progressive causes of the kind supported by the bank.
Like other progressive asset managers, Amalgamated also engages in shareholder activism, leveraging the power of the shares it holds on behalf of clients to compel corporations to pursue the bank’s favored policies. The Capital Research Center reports that Amalgamated has filed shareholder resolutions with the likes of “Amazon, Lowe’s, PayPal, Netflix, and Smith & Wesson, on everything from board diversity to greenhouse gas emissions to political spending and lobbying” – alongside union affiliates. It also litigates against companies that violate its principles.
Amalgamated has been especially active in promoting anti-gun efforts.
The initiative that landed the bank on the radar of congressional Republicans was originally advocated by Sorkin. In 2018, following several mass shootings, the Times columnist suggested that banks and credit card processors develop gun retailer-specific merchant category codes (MCCs).
When one makes a purchase with a card issued by American Express, Mastercard, or Visa, such transactions are reported to the payment brand with a code that can be used to track a customer’s activities.
“If the credit card companies and banks agreed, they could come up with a series of subcodes that would identify retailers that sold guns under a ‘best practices’ policy — like the policy that Citigroup proposed [restricting gun sales by its clients] … and the ones that don’t,” Sorkin said. “It would … give banks that issue credit cards the opportunity to decide which retailers they wanted to associate with [and] might add pressure on gun retailers to voluntarily follow the ‘best practices’ route.”
In July 2021, Amalgamated took up the cause, petitioning the relevant code-blessing International Organization for Standardization, to create a new credit card code covering standalone gun and ammunition retail stores.
Months later in October 2021, Senate and House Democrats took up companion bills directing Treasury’s Financial Crimes Enforcement Network to collect information from financial institutions to develop “an advisory regarding the reporting of suspicious transactions related to gun violence.” Sen. Elizabeth Warren co-sponsored the Senate legislation. The bills languished, but a new Gun Violence Prevention Caucus convened by Senate Democrats is poised to introduce it again this term.
The International Organization for Standardization would reject Amalgamated’s petition that same October, and deny its appeal in February 2022 – reportedly amid opposition from the major payment brands, whose representatives serve within the group. In June 2022, Amalgamated would apply again. The brands continued to disapprove of the petition. But in September 2022 that all changed.
That month, congressional Democrats led by Sen. Warren sent a letter, endorsed by Amalgamated, to leading payment brand CEOs, urging the companies to get behind the petition, and questioning why they were “obstructing” Amalgamated’s effort. Notably, Amalgamated had banked several of the signatories’ campaigns during the 2022 campaign cycle, including that of the Massachusetts senator.
The standardization body relented, and the major credit card companies adopted the code. Bank president Sims Brown declared victory. “The new code will allow us to fully comply with our duty to report suspicious activity and illegal gun sales to authorities without blocking or impeding legal gun sales,” she said.
Neither Amalgamated nor Sen. Warren’s office responded to RealClearInvestigations’ inquiries. The parties have never publicly discussed any coordination they might have engaged in with respect to the anti-firearms credit card push.
Sorkin, who also did not respond to RCI’s inquiries about his activism, wrote that the creation of the code is “only the beginning” of a broader gun control effort, urging retailers to assign the code to specific registers so payment brands could identify gun-specific purchases, and calling on financial companies to develop algorithms to identify suspicious activity and report it to authorities.
Republican senators wrote in a subsequent letter that the code aimed “to target, surveil and discourage gun and ammunition sellers.” They added: “Your actions were a major step toward targeting law-abiding Americans exercising their right to purchase firearms.”
House Financial Services Committee Republicans argued in a separate letter that “There is a serious risk … this new MCC will be abused with every transaction flagged as suspicious. At a minimum, monitoring the firearms seller MCC … poses a serious risk of circumventing important existing legal restrictions on the creation of a firearm registry.”
The Firearm Industry Trade Association characterized the code as a “stepping stone to watchlists and bans.” Sims Brown has dismissed these concerns.
Amalgamated has also taken a leading role in the financial services industry’s push to use its market power to drive the green agenda. In April 2021, the bank reported it had helped launch the Net Zero Banking Alliance. The financial sub-group of a broader, United Nations-backed coalition consists of 119 banks with $70 trillion in assets who have “committed to aligning their lending and investment portfolios with net-zero emissions by 2050.”
Last October, attorneys general representing 19 states revealed they were investigating six major U.S. banks over their participation in the alliance – excluding Amalgamated. Then-Missouri Attorney General, now Senator Eric Schmitt, a Republican, said that the states were probing the “banks for ceding authority to the U.N., which will only result in the killing of American companies that don’t subscribe to the woke, climate agenda.”
RCI contacted the offices of several attorneys general leading the probe to ask if Amalgamated had become a subject of their investigation given its role in the alliance. The Missouri AG’s office replied that it had no comment, as the investigation was pending.
Amalgamated has also submitted input on, and formally endorsed, relevant regulations proposed by the Biden SEC, such as its controversial proposed climate risk disclosure rule. Amalgamated was the sole banker for the Biden presidential campaign.
In October 2021, prior to the release of the proposed climate rule, Amalgamated’s chief sustainability officer participated in a meeting alongside like-minded executives with SEC Chairman Gary Gensler, according to Gensler’s public calendar. Neither Amalgamated nor the SEC responded to RCI’s request for information about that meeting. The SEC has been slow to respond to RCI’s related FOIA requests.
With the Senate in Democrats’ hands, it is unclear if Republican leaders on the Banking and Judiciary Committees who had put Amalgamated on notice last fall for their gun control push will follow through. Their offices did not respond to RCI’s inquiries or would not speak on the record regarding their oversight plans.
Like their Senate counterparts, House Financial Services Committee Republicans were tight-lipped when RCI inquired about any pending Amalgamated probe. A spokesperson for GOP Congressman Andy Barr referred RCI to the press release announcing his chairmanship for the House Financial Services’ Subcommittee on Financial Institutions and Monetary Policy.
House Republicans in their initial missive to Amalgamated indicated they were keen to understand the extent of the bank’s coordination with activist groups in its credit card code push.
Some critics argue that Amalgamated’s extraordinary business model – leveraging money from Democrats and unions, including those of public sector employees, to pursue policies often championed by those very clients – creates novel conflicts. Morrison told RCI that “to the extent” Amalgamated has “clients who are policymakers … they should be scrutinized over whether the progressive policy changes they’re lobbying for will benefit them … and whether their influential clients exerted any influence to make such changes happen.”
He added, however, that “If other corporations can lobby for lower corporate tax rates, Amalgamated can lobby for gun control measures.”
Richard Painter, the Republican-turned-Democrat former chief legal ethics officer of the George W. Bush administration, said that banks should coordinate with politicians on relevant issues, citing for example a hypothetical effort to collaborate on cracking down on Chinese money laundering in the financial system.
Though there is little to indicate that Amalgamated’s pursuit of progressive causes is disingenuous or rooted primarily in a desire to curry favor with Democrats in ways that will redound to the bank’s bottom line, Painter expressed a general concern that banks often take such positions for the kind of self-serving reasons Morrison raised. Citing Wall Street’s progressive posture on social issues, and now indicted crypto-currency entrepreneur Sam Bankman-Fried’s championing of similar causes, Painter said “these guys, they go left to support the Democrats, do a lot for them, and then behind the scenes they’re looking for less regulation and they do whatever they want in the financial services sector.”
Painter asserted that political banking of the kind Amalgamated engages in is perfectly legal provided a bank does not offer politicians services at below-market rates or coordinate with their campaigns in its political activism, which would raise campaign finance red flags.
Others with whom RCI spoke expressed concerns about whether Amalgamated’s ESG-oriented activism undermined the financial interests of its clients by dampening their returns – which could impact taxpayers if Amalgamated is managing public sector union money.
As a general matter, said Terrence Keeley, a former BlackRock executive and proponent of impact investing critical of ESG investing as currently practiced, “Politics and finance should be like church and state – as far as possible from one another.”
Amalgamated has violated that tenet, but the market hasn’t seemed to mind. Its stock is near an all-time high, notwithstanding potential congressional scrutiny, and a slew of “recent executive resignations … regulatory ‘issues’ preventing an acquisition, a big ‘reclassification’ of assets, and a large share sale” by one of Amalgamated’s major investors — signs of potential peril highlighted by one bearish observer.
Capitalism would seem to have been good to the socialist-founded bank.
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Ben Weingarten is a writer for RealClearInvestigations.
Photo “U.S. Capitol” by Blue Arauz.