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November 20, 2000
NAACP Issues Banking Industry Report Card
by Mark Thomsen
A recent NAACP report card slamming the banking industry has the right objectives, but the methods
used to determine grades spur questions about the report's conclusions.
SocialFunds.com --
The National Association for the Advancement of Colored Persons (NAACP), in a review of the banking
industry, issued a report card stating that 10 of the 15 largest U.S. banks received a grade of C-
or lower. On the outset, such a report would seem to be a useful tool for social investors. A
closer look at the methods used for calculating the grades, however, clouds the value of the
report's conclusions.
 The banking report was implemented under the
NAACP's Economic Reciprocity Initiative (ERI). The ERI project began reviewing selected industries
in 1996. The NAACP's report cards are designed to provide information about corporations so that
consumers and organizations can make informed choices regarding products and services.
Banks selected for the report had to be full-service commercial institutions, have revenues of
at least $5 billion and offer branch banking. The data was collected through a survey that each
respective bank had to complete.
The survey was divided into five categories: employment,
community reinvestment, advertising/marketing, vendor development and charitable giving. In each
category, various criteria were analyzed. For example, in the advertising/marketing category, the
report examined how many institutions utilized African-American agencies, both in aggregate number
and in dollars spent.
The collective grade for the industry was a less-than-mediocre C-.
The top five scorers were: Bank of America, First Union, Chase Manhattan, Wachovia and Bank of New
York, with Bank of America receiving the only B and the others receiving C+ or C. The remaining
banks, Bank One, PNC, National City, U.S. Bancorp, Mellon Bank, Fleet Boston, Key, Citigroup Wells
Fargo and SunTrust received C-'s or less. Only SunTrust received an F grade.
"The report
card grades earned by the banking industry are disappointing and a serious indication that people
of color are still not ensured fair access, full benefit or equal treatment by banks in their
communities," said Kweisi Mfume, NAACP President and CEO. "The NAACP strongly urges people of color
and supporting organizations to avoid spending and or investing their dollars with the banks that
earned poor or failing grades."
Questions about the report card's conclusions stem from
how NAACP's in-house researchers treated the lack of a response, or a response that did not comply
with the specified format. A failing grade was given if a survey was not returned.
Failing
or very low grades were also assessed in individual categories if the companies did not furnish
enough information or did not furnish it in the requested manner. Readers of the report therefore
cannot determine exactly how much of the grade is due to actual performance and how much is to not
supplying the data in the correct format.
This seems to be the case for SunTrust. "I think
our grade reflects our inability to provide the data in the format required by the NAACP" said
SunTrust spokesman Barry Koling. The NAACP required data on a consolidated basis, and SunTrust had
difficulty complying with that since it operated as 28 separate, chartered banks up until this
year.
There is no doubt that the issues covered in the report card are of great
importance. The ERI project has noble objectives, and the right questions are being asked. With its
stature as the nation's strongest civil rights organization, the NAACP could continue building on
past successes with clear, objective reports based on complete data. But social investors can only
hope that in the future NAACP industry report cards, grades will be based solely on actual
performance.
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