Irony: Bank Bashing Union Bosses Gouging Members Issuing Their Own High-Interest Usery Fee Credit Cards
- Post 04 June 2012
- By Copy Editor
With the Service Employees International Union (SEIU) and AFL-CIO spending tens of millions on political activism, including the recall election of Wisconsin Governor Scott Walker, union members might do well to see where the money is coming from.
Big unions are morphing into the kinds of big businesses and banks they decry, hawking to their members everything from high interest credit cards to home loans.
And contrary to Big Labor’s claims, these products offer no real benefit to union members—only to the union bosses.
As the collection of union dues have dipped, union bosses are increasingly looking for ways to bend the revenue curve in their favor by profiting off loans and credit extended to their members.
Consider, for example, the “SEIU New Rewards Visa Card” and the AFL-CIO “Union Plus” card. With each new enrollment and subsequent swipe of the card, the union bags a fee and a percentage respectively.
This turns into huge money: In FY2011, according to its LM-2 filing with the Department of Labor, the AFL-CIO received approximately $28,163,266.00 from credit card revenue.
Given the labor movement’s high-wattage rhetoric against the big banks, issuing credit cards to union members seems like an odd revenue source for Big Labor to pursue.
After all, SEIU has blasted the banks for pushing “credit cards and other banking products with unfair rates or traps in the fine print.” Furthermore, they’ve enlisted their members to report banks offering “new products designed to push consumers further into debt.”
If banks offer consumers products that ensnare them in deeper debt it’s a problem. But when unions do it, suddenly it’s a legitimate revenue stream.
Former SEIU Executive Board Member Stephen Lerner has attacked banks for being built on “a business model on screwing customers, pushing dangerous products, and burying customers in more and more debt.” Still, that hasn’t stopped the union credit card moneymaking gambit.
Indeed, the AFL-CIO goes so far as to encourage their members to consider putting “a portion of your vehicle’s down payment” on their union credit card. Oddly, forget to mention that the union will bag a portion of the transaction.)
In fact, the AFL-CIO was so determined to see their credit card program succeed that they hired an executive from Citicorp and American Express who managed corporate card marketing for those firms to head up the effort.
Both the AFL-CIO and SEIU try to give their members the impression that their cards are superior to others on the market, but they’re not. The SEIU, for example, offers an introductory rate of 12.24% APR to 22.24%, which is consistent with the industry standards the union have labeled “predatory.” The SEIU card boasts that it doesn’t charge a late fee. But union members should read the fine print; if they miss a payment, their rate skyrockets to 27.99%.
Nerdwallet, which Money magazine calls the “Best Credit Card Site” on the web, compares the value of more than 1,000 credit cards. They thrashed the Union Plus card’s slick advertising and complex fine print.
Worse, Nerdwallet points out that many of the card’s so-called benefits are already available by virtue of union membership. “We are appalled at the popularity of the Union Plus Credit Card,” says Nerdwallet. “Avoid the Union Plus Credit Card.”
Along with credit cards, the AFL-CIO and SEIU hawk “Union Plus” mortgages to their members. The AFL-CIO’s Richard Trumpka says his union has held an estimated 200 protests against Chase and other lenders, and the SEIU’s website declares: “Chase hurts everybody. They’re making a profit by lending taxpayers their own money.”
But if you need a mortgage and use the Union Plus mortgage program, the unions direct you to Chase. “Financing a home can be a complicated business, so why not leave it to the experts?” states a local SEIU website. The Union Plus program is nothing special; it offers rates and fees comparable to other programs offered by Chase. The only difference is the fee given to the Union when a member signs up. Thus far, the Union Plus mortgage program has directed more than 80,000 mortgages to Chase.
Beyond the irony and hypocrisy of labor unions being transformed into financial services providers, this new reality creates a massive conflict of interest for union bosses.
By fostering the illusion that union-backed financial products are somehow better and less “predatory” than non-union products, Big Labor is making big bucks. But when union bosses become the middleman, their interests become boosting revenues from banks and credit card companies, not brokering a better deal for union members.
The SEIU credit card grew out of the deep financial crisis the union found itself in 2009. With membership falling and tens of millions in debts as a result of its spending on the presidential election, SEIU needed a way to raise some fast cash. And the unions are increasingly working for the financial institutions and not for their members.
For example, the SEIU pushes its credit cards through SEIU Services and Marketing Inc., a taxable corporation. Its purpose: to provide “technical assistance and support services to financial institutions and financial services firms, aiding those institutions and firms with the promotion and marketing of their products beneficial to our members.”
All this means that AFL-CIO and SEIU members have themselves become enormous profit centers for the union bosses who control them. When the banks do it, it’s called Wall Street greed at its worst. When the Big Labor does it, it’s simply working the union way.