If you have any factual additions of corrections, please post on the US Bank OFF UC Davis Facebook page
Why U.S. Bank has no place at UC Davis:
1) Systemic issues
The rise in the cost of college education stems not only from budget cuts, but also from the collusion between the banks and the Regents.
Banks profit from student loan debt. Student loan debt increases as college tuition and fees increase. Therefore, banks profit from fee hikes. It makes good business sense for banks to push colleges to raise fees.
The UC Board of Regents is glad to oblige. Most Regents are prominent financiers themselves. UC Regent Monica Lozano, for instance, sits on the board of Bank of America. Regent profiles can be found here:
The university, which increasingly behaves like a for-profit institution, benefits from student loans as well. If students can be made to exchange their future lives for present cash, the university can raise its tuition much faster than if there were no banks involved, and much faster than its costs are increasing. Fee hikes require the presence of banks in our public education.
Americans now owe more than $1 trillion in student loans. Once that debt bubble bursts, we will see a replay of the 2008-2009 subprime mortgage crisis – the economy collapses, higher education gets further defunded, and the banks get bailed out.
2) National issues
U.S. Bancorp personifies the reckless and oppressive business practices that led to the recession:
- As of 2010, U.S. Bank was the 8th largest lender profiting from the student debt bubble
This includes over 2000 customers at UC Davis
- TARP Recipient: $6.6 billion
- Shady foreclosure practices. A court in Massachusetts affirmed a lower court decision that U.S. Bank failed to show it held the mortgages at the time of the foreclosure.
- US Bancorp is “substantively involved in financing nuclear weapons producers”
- Racist/aggressive lending practices. U.S. Bancorp confined African Americans to higher-cost loans above the Federal defined subprime rate spread 1.72 times more frequently than whites. U.S. Bancorp confined Latinos to higher-cost loans above the rate spread 1.71 times more frequently than whites.
- Systematically forced customers to get overdraft fees by processing debits before credits:
- Foreclosed on 998 homes between 2007 and 2011 in Oakland alone
3) Campus issues
Our student ID cards carry the U.S. Bank logo and double as U.S. Bank debit cards (ID Card and Banking Services Agreement). Students do not have the option of obtaining ID cards not tied to U.S. Bank.
The agreement specifies that “no other financial services institution will be permitted a staffed banking service location” (section 8.1 of the Financial Services Partnership Agreement). The system thus allows the biggest corporations to pay the government to create artificial monopolies for them.
The agreement also specifies that U.S. Bank advertising to UCD students will be paid for by UCD (section 8 of the Financial Services Partnership Agreement, Exhibit A of the Sponsorship Agreement). A bank is advertising to us on our own campus with our own tuition money.
The agreement does not require U.S. Bank to disclose how much money it is making off the free advertisement.
As per the agreement, the more UCD students sign up for U.S. Bank, the more money UCD receives (section 6.1.c of the Financial Services Partnership Agreement). The administration thus has a direct incentive to get students to sign up, even when this goes against the students’ objective self-interest.
“Won’t UC Davis lose money if the bank leaves?”
Yes, it will. UCD spokesperson said that “the university received a total of $167,500 from U.S. Bank last year.” For comparison, Chancellor Katehi’s annual salary is $400,000.
The interests of the University should not be conflated with the interests of the students. The millions of dollars in student debt did not figure in the administration’s decision-making calculus when it signed the agreement. Once the students graduate, they are no longer the University’s problem.
The $167,500 UCD receives is also significantly below the market price. If U.S. Bank wanted to run a similar advertising campaign in the Davis Enterprise, that would cost the bank $479,232 per year.
“Doesn’t the blockade inconvenience students?”
Yes, it does.
There are ATMs right next to the bank, and there is another U.S. Bank branch downtown. The fact that despite all this, the blockade is still viewed as an inconvenience highlights the monopolistic nature of U.S. Bank presence on campus.
The blockade is aimed at the bank, not at the students. The right to a service can be either unconditional or conditional on the presence of the service. The right to use the bank on campus is not unconditional – the 105 years during which students could not use the bank on campus because there was none were clearly not a rights violation. Nor would it be a rights violation if the university decided to banish the bank from campus. This means that the right to use the bank is conditional on the bank’s presence on campus. But if that presence is itself illegitimate, then no right cannot be derived from it.
“Won’t the university have to pay a termination fee if U.S. Bank leaves?”
No. The university would have to pay a termination fee if it breaches the contract (section 5.2 of the Financial Services Partnership Agreement). The university is not formally affiliated with Occupy UCD, so the blockade is not a breach of contract on the university’s part. “Bank assumes all responsibility for the protection of Bank, its agents and invitees from acts of third parties” (section 36 of the “Regents as Landlord” agreement).
“In his March 1 letter to the Regents US Bank Senior Vice President Daniel Hoke wrote ‘The employees of U.S. Bank who, at times, arrived prior to the protesters were effectively imprisoned in the Branch.’ What’s up with that?”
This is false. The blockaders had a policy of not impeding anyone trying to exit the branch. Bank workers were free to leave at any time and typically did leave.
“No one is forcing students to use the bank. Why don’t you let students make their own decisions?”
First, the entire reason why US Bank wanted to have a location on campus was because that gave it a significant competitive advantage over other banks and credit unions. The choice the students face is thus skewed from the outset.
Second, students face a collective action problem. As a group, students would be better off if they unite and fight the bank. But given the conditions created by the Regents-US Bank Contract, it may very well be that each individual student is better off conforming and using the bank. Allowing the bank to stay is statically, but not dynamically efficient. The situation where there are no feasible alternatives to the big banks is not natural – it is artificially created by the same big banks in coordination with government institutions, and thus requires a systemic solution rather than an opt-out on an individual level.
5) More info:
All of the US Bank – UC Regents agreements
Division of Student Affairs – ASUCD agreement