The biggest banks in the nation have played the role of villain for the last few years as they’ve responded to the financial crisis they helped create by taking taxpayer-funded bailout money and finding ever-more creative ways to raise fees on their customers.
Up to now, the leaders of these financial institutions have seemed painfully out of touch with the struggles of regular Americans, but suddenly it seems like one bank CEO has seen the light.
His name is Vikram Pandit, and he is the CEO of Citibank. At a meeting of finance industry leaders recently, Pandit delivered a speech in which he said banks have done a poor job of helping customers understand complicated financial products and asserted that they need to figure out how to treat their customers better.
He said, “I believe that all financial institutions should be required to disclose, in plain language, the essential facts about their products, especially credit offerings.”
Wait, did we hear that right? Did a high profile bank CEO just call for more regulation of banks and better protections for consumers? I think an angel just got its wings!
He also went on to say that the current system of using credit scores to determine whether to lend money to people (and at what cost) is broken and ineffective. He suggested that lenders need to transition to a system that takes into account people’s income and assets, not just their payment history and debt.
These kinds of changes could make the average person’s dealings with financial companies significantly less painful — and that would help not only the individual but also the financial system as a whole. So Mr. Pandit, we salute you! Now just get some of your colleagues and peers to see the light!
Image by William Munoz