Bank of America Corp., the second-biggest U.S. bank, has begun selling credit cards to customers who lack a U.S. Social Security number or credit history, opening the business to immigrants who may be in the country illegally.
The bank said it expanded the program to 51 branches in Los Angeles County last week after testing it at five locations there. Lending specialists at the Charlotte, North Carolina-based company decide an applicant's qualifications rather than relying on credit scores and other traditional measures.
U.S. banks including Wells Fargo & Co. are giving checking accounts and mortgages to immigrants based on their tax identification numbers, which are granted by the Internal Revenue Service to people who either don't have or aren't eligible for a Social Security number. They're issued regardless of immigration status because nonresidents may owe taxes, meaning those who enter the country illegally can obtain them.
Bank of America requires that customers have an ITIN number or "other evidence of taxpayer status" to maintain an account if they don't have a Social Security number, spokeswoman Alex Trower said. "This initiative allows customers to build a solid credit history with a leading bank."
About 8.7 million illegal immigrants live in the United States, according to U.S. Census Bureau estimates based on the 2000 population count. The Pew Hispanic Center, a Washington-based research organization, put the number last year at 11.5 million to 12 million, saying 6 million to 7 million entered the country by evading immigration inspectors and border control agents.
The use of ITINs to secure financial services such as loans has made it easier for undocumented immigrants to assimilate into society and is endangering homeland security efforts, according to critics such as Rep. John T. Doolittle, R-Calif. He introduced legislation in 2005 seeking to prevent lenders from giving mortgages to "illegal immigrants."
Rep. Tom Tancredo, R-Colo., sent a letter Tuesday to Attorney General Alberto Gonzalez and Department of Homeland Security Secretary Michael Chertoff asking them to look into whether Bank of America's decision "creates a dangerous loophole for would-be terrorists seeking to finance their efforts," according to a statement.
Lenders don't believe the onus should be on them to check an applicant's citizenship status.
Financial services companies have to verify identification "as much as they can," on top of ascertaining whether someone can repay a loan or not, said Steve Bartlett, president and chief executive officer of the Financial Services Roundtable, a Washington-based industry group whose members include banks.
The Immigration and Customs Enforcement agency is responsible for making sure immigration laws are followed, "not a bank, not a pharmacy, not a supermarket," he said.
Trower said Bank of America's requirements are consistent with the U.S. Patriot Act. To obtain a credit card under the new program, customers must have a deposit account with the bank for three months, and maintain a "good relationship," she said.
Robert Justich, a senior managing director at Bear Stearns Asset Management in New York, said Bank of America's pilot program came as "no surprise." Undocumented immigrants have been securing credit cards from financial institutions "for years," he said. Banks typically send out pre-approved credit cards to customers with deposit accounts, including those opened with identification cards issued by foreign governments.
"Companies have been given the green light to target these markets because they think it's a safe bet the U.S. government won't send these people back," said Justich, who wrote a 2005 report called "The Underground Labor Force Is Rising to the Surface." "If the government were to crack down it would decrease the creditworthiness of these clients and banks would have to revisit their strategy."
The Wall Street Journal reported the Bank of America credit- card program earlier Tuesday.
Bank of America has been expanding services to Hispanic customers. In September 2005 it overhauled its SafeSend remittance card service to Mexico, eliminating transfer fees for customers with checking accounts at the bank. As proof of identification, the bank accepts the Mexican Consular ID card and a Mexican voter registration card.
The bank also sells an Efectiva Visa card, a loyalty-based program that gives cash back for purchases made, and provides bilingual services in Spanish and English.
Last year, San Francisco-based Wells Fargo began offering home loans to undocumented immigrants and foreign nationals in Los Angeles and Orange counties in California based on their ITINs. Five years earlier, the bank started accepting "matricula" cards, or identification cards issued by the Mexican, Guatemalan and Venezuelan governments, to open checking and savings accounts.
"Right now we're evaluating the ITIN program," Wells Fargo spokeswoman Hillary Johnson said. "It has not been expanded."
Contributing: Alison Vekshin
E-mail: wiedwards@bloomberg.net