Wholly Owned Subsidiary of the Union of Needletrades, Industrial & Textile Employees
Total Assets: $3.28 billion (2002)
NAIC: 522110 Commercial Banking; 522291 Consumer Lending; 522310 Mortgage and Other Loan Brokers; 523991 Trust, Fiduciary and Custody Activities
Amalgamated Bank is the only bank in the United States wholly owned by a labor union. Located chiefly in New York City, but with branches in California, the District of Columbia, and New Jersey as well, Amalgamated Bank offers free checking accounts, no minimum balance on savings accounts, low monthly fees, low rates on mortgages and auto loans, and low or no fees on ATM transactions. In addition to its full line of commercial and individual banking services, Amalgamated Bank provides trust, investment advisory, custodial, and benefit remittance services for employee benefit plans.
Working-Class Financial Institution: 1923–63
The Amalgamated Bank of New York was founded in 1923 by the Amalgamated Clothing Workers of America (which later became the Amalgamated Textile and Clothing Workers Union, and, still later, the Union of Needletrades, Industrial and Textile Employees–UNITE). The first labor bank in New York, it was also said to be the first bank in the city to operate on a profitsharing basis with the depositors. Amalgamated Bank was originally located on East 14th Street in Manhattan but took a lease in 1925 on the five-story Tiffany Building adjoining Union Square, where its headquarters remain to this day. By this time, the number of its depositors had grown from 1,900 to 12,000.
Amalgamated Bank of New York—and its sister bank in Chicago, the Amalgamated Trust and Savings Bank—were among the 36 union-backed banks founded in the United States during the 1920 (22 in the first four years of the decade alone). Most of them failed to survive the Great Depression because they were run by union officials who made poor investments and often put ideology before prudence—for example, by financing strikes and making unsecured loans to union members and supporters.
The Amalgamated Bank of New York, founded with $300,000 in capital, offered such services as low-interest loans to workers and debt-consolidation services to police and firemen. Because many of the parent union's members were immigrants, Amalgamated was the first to introduce a foreign-exchange transfer service allowing them to send remittances safely to their relatives in Europe, payable in dollars rather than local currency. Within three years, over 400,000 individuals and 200 banks were using this service, and during the first 20 years more than $50 million was sent to 1,273,931 distressed persons abroad. Amalgamated also established a travel agency for the same reason. In 1924, it was the first New York City bank to offer unsecured instalment loans based on the borrower's employment history and future earnings potential. It also financed the first union-supported housing project in the United States, in New York City's borough of the Bronx. Eventually the program grew to three cooperative projects—the other two in lower Manhattan—providing low-cost housing for 2,536 families and serving as a model for much larger housing developments financed by big insurance companies.
Amalgamated Bank of New York had prepared itself beforehand for what proved to be the panic period of the Depression by selling securities for cash and liquidating loans, even at a loss, until its holdings were all in cash and short-term federal Treasury bonds. As a result, it was always able to reimburse depositors closing their accounts and was one of the first banks allowed to reopen following the bank holiday declared by Franklin D. Roosevelt following his presidential inauguration in March 1933.
During the next 30 years, Amalgamated Bank of New York provided loans for workers who wanted to buy apartments in its three housing cooperatives. It started managing trust funds for other unions in the early 1960s and extended banking hours for the convenience of workers. The bank also established professional investment counseling for the managers of the union's growing pension and welfare funds. By 1963, when Amalgamated Bank celebrated its 40th anniversary, it was—along with the sister bank in Chicago and a Kansas City, Kansas, institution—the only survivor of the many fully owned union banks that had been founded in the 1920s. The institution's assets came to $115 million (compared to $1.44 million at the end of its first year). Amalgamated's rates for auto and personal loans were the lowest in New York City. It had a customer base of about 30,000 depositors and borrowers in 1965.
Remaining True to Its Origins: 1973–98
Amalgamated Bank of New York began offering checking accounts in 1973, becoming the first in the metropolitan area not to charge a fee either for the service or for checks without requiring a minimum balance. Also in 1973, it created a division for trust and investment services to serve employee benefit plans, providing trust, investment advisory, custodial, and benefit remittance services. A tradition of special help to labor and liberal groups continued into the 1970s and 1980s. Amalgamated Bank of New York once opened its vault on a Saturday in order to provide $300,000 in bail for pickets arrested the night before. The National Association for the Advancement of Colored People received $800,000 to post a cash bond within 24 hours. In 1973, bank officials worked all weekend to come up with bail checks so that striking Philadelphia teachers could stay out of jail. Nine years later, Amalgamated gave the striking National Football League Players Association a $200,000 loan even though the association did not have a bank account.
Since Amalgamated Bank of New York had no private shareholders—the parent union remained sole owner—it felt no pressure to abandon its conservative way of doing business in order to increase earnings. "We're probably the most liquid bank in the country," Edward M. Katz, the bank's president and chief executive officer, told Mario A. Milletti of the New York Times in 1978. Over 90 percent of its assets were in cash, temporary loans to other banks, and government and municipal securities. Amalgamated made practically no commercial or industrial loans, and its mortgage loans were only up to a maximum of five years. In all, loans came to only 15 percent of assets, compared to about 52 percent for non-labor banks of comparable size. Amalgamated encouraged thrift among its small customers by allowing pooling of funds to buy U.S. Treasury securities, so that a depositor with only $500 to invest could buy a certificate with a maturity of as little as nine months, yet receive 7 percent in interest. The bank had four offices and $720 million in assets at the end of 1977.
Amalgamated Bank of New York's practice of concentrating its investments in short-term securities was a wise policy during the inflation-ridden 1970s and early 1980s, when interest rates rose into the double digits. Its fully discretionary pension assets grew from $365 million in mid-1978 to $500 million in mid-1980. Amalgamated was managing pension funds for 93 unions by late 1983, almost entirely in the New York metropolitan area. Although it also had a few such nonunion accounts, none were personal trusts or estates, corporate employee-benefit accounts, charitable trusts, or state or local retirement funds. "We're selective as to who we take on," Katz told Cathy Capozzoli of Pensions & Investments. "We don't accept funds with stipulations about equity or long-term investments."
In 1980, as Japanese-made automobiles were flooding the U.S. market, Amalgamated offered purchasers of domestic cars a half-percentage-point discount on 24-to-36-month auto loans. "We just think it is important to help the American worker get back on the job," Katz told the New York Times. "It is important to give a helping hand." In 1982, after the New York Times quoted a Citicorp officer as saying, "A person with $200 or $300 in savings shouldn't be in a bank," Amalgamated took out an ad in the Times expressing outrage. Katz told Alice Arvan of American Banker that the statement was "philosophically inconsistent with the spirit of good community banking," adding that "in fact, one of the reasons labor banks were founded was to provide banking services to people not considered acceptable to other banks." Speaking to Lawrence Van Gelder for a 1985 Times profile, Katz summed up what he saw as the bank's philosophy in these words: "What differentiates a labor bank from any other bank is that while we are a profit-making institution, we feel that some portion of our profits should go into areas where you don't always have to maximize your earnings. … In a sense we have become the conscience of the banking community."
When sharply lower inflation rates belied Katz's belief that the annual cost of living increase would never drop below 5 percent, Amalgamated Bank of New York found itself deprived of the higher yields that other investors had locked in from long-term corporate bonds and Treasuries. Nevertheless, the bank continued to make steady profits and few mistakes. In 1986, it charged off only $195,000 in bad loans out of its portfolio of $313.5 million. Only 11 out of 13,034 auto loans were 30 days or more delinquent, perhaps because Amalgamated's interest rate was the lowest offered by any bank in the city. The annual yield on its money-market rates was higher than the average paid by ten big institutions tracked. Amalgamated also charged no fees on savings accounts with a $5 minimum. In 1992, the bank initiated what it called a unique equity index mutual fund that it said would push for enhanced shareholder value by encouraging business boards to pursue sound governance policies and hold managements accountable to high social and corporate citizenship.
Our mission is to bring affordable banking and investment services to working men and women and to serve as a strong financial ally to unions.
Expanding beyond New York: 1998–2003
Amalgamated Bank of New York opened its seventh branch—and its first outside the city—in 1998, in Washington, D.C., the home of AFL-CIO headquarters and to more than 40 labor unions. Bank officials said that, as in New York, they would offer free checking accounts with no minimum balance. Almost a year and a half later, however, Amalgamated had brought in only $35 million in deposits, inspiring a letter from consumer advocate Ralph Nader chiding local union leaders for ignoring the bank, which was reported to be taking measures to attract Hispanic customers.
Also in 1998, Amalgamated acquired an 81 percent stake in the First Trade Union Trust Company. The name of this Los Angeles-based institution was changed to Amalgamated Trust Company. Amalgamated Bank of New York shortened its name to Amalgamated Bank in 2000.
In 2002, Amalgamated Bank became the first plaintiff to take legal action against Enron Corp. managers for securities fraud in relation to the failure of the giant corporation in the previous year, and it was a member of the class-action lawsuit against the company. The bank also led litigation by shareholders opposing Unocal Corp.'s investments in Myanmar, challenged what it called excessive compensation for executives of General Electric Corp. and other firms, and opposed initiatives by some U.S. companies to relocate in Bermuda in order to avoid federal taxation.
Amalgamated opened a branch in Lyndhurst, New Jersey, and expanded into California in 2002, when it opened a branch in Pasadena. A UNITE executive told Dave Melendi of the San Garbriel Valley Tribune that "A lot of banks have been pulling out of California, especially Southern California. We think that creates a need. We think with banks pulling out there's a lot of low-wage workers and hard pressed working people in Southern California." In 2003, Amalgamated opened a branch in uptown Manhattan's West Harlem neighborhood.
Besides its headquarters and its Washington, Lyndhurst, and Pasadena branches, Amalgamated Bank had, in 2003, three Manhattan branches, two Bronx branches, and one in Queens. Total assets came to $3.28 billion at the end of 2002, total deposits to $1.81 billion, and net income to $11.15 million. The bank's deposit options included checking, savings, and money-market accounts, certificates of deposit, and direct-deposit payments. It also offered bank cards and online banking. Automobile, home equity, home improvement, mortgage, and personal loans were available. The bank also offered personal lines of credit and health-care financial services.
- The bank is founded by the Amalgamated Clothing Workers of New York.
- Amalgamated Bank of New York moves to 15 Union Square, which is still its headquarters.
- The bank is one of the first to reopen following panic withdrawals of the early Depression era.
- Amalgamated Bank of New York's assets reach $115 million.
- Amalgamated begins offering checking accounts.
- The bank has four branches and $720 million in assets.
- Amalgamated opens a branch in Washington, D.C.
- The bank opens a branch in Pasadena, California.
Astoria Financial Corporation; New York Community Bankcorp Inc.; Independence Community Bank Corporation; Washington Mutual, Inc.
Andrejczak, Matt, "New York's Amalgamated to Court Hispanics in D.C.," American Banker, October 6, 1999, p. 6.
——, "New York Union-Owned Bank Establishes an Outpost in D.C.," American Banker, May 15, 1998, p. 5.
Arvan, Alice, "Amalgamated Takes Out Ad to Decry Citicorp Official's Remarks on Saving," American Banker, March 3, 1982, p. 2.
Capozzoli, Cathy, "Amalgamated Portfolios 'Short Term'," Pensions & Investments, July 21, 1980, p. 38.
"Clothing Workers' Bank Twenty Years Old Today," New York Times, April 14, 1943, p. 38.
"Incentives Offered on U.S. Cars," New York Times, August 12, 1980, p. D4.
Koshetz, Herbert, "Amalgamated Bank to Reduce Charges for Special Checking," New York Times, September 14, 1965, pp. 49, 56.
"Labor Bank Fetes Its 40th Year," Business Week, May 25, 1963, pp. 67–68.
"Labor Bank Leases Tiffany Building," New York Times, August 3, 1925, p. 27.
Melendi, Dave, " 'Labor Bank' Opens Branch in Pasadena, Calif.," San Garbriel Valley Tribune, August 31, 2002, p. 1.
Milletti, Mario A., "Amalgamated: Cautious Bank with Union Label," New York Times, July 1, 1978, pp. 23, 31.
Paz, Peter, "N.Y. Bank Opening Branch on K Street," Washington Post, May 13, 1998, p. C11.
Peterson, Leroy, "Twenty-Two Labor Banks Organized in Four Years," New York Times, April 10, 1924, Sec. 8, p. 12.
Rose, Robert, "How a Union Survives in Banking by Pushing Services Over Profit," Wall Street Journal, December 14, 1987, pp. 1, 18.
Tyson, David O., "Union-Owned Amalgamated Bank Manages Pensions by Matching Rates," American Banker, October 25, 1983, pp. 24–23.
Van Gelder, Lawrence, "A Banker Who Began at 60 Cents an Hour," New York Times, April 21, 1985, Sec. 21, p. 2.
"Amalgamated Bank." International Directory of Company Histories. . Encyclopedia.com. (February 23, 2019). https://www.encyclopedia.com/books/politics-and-business-magazines/amalgamated-bank
"Amalgamated Bank." International Directory of Company Histories. . Retrieved February 23, 2019 from Encyclopedia.com: https://www.encyclopedia.com/books/politics-and-business-magazines/amalgamated-bank
Encyclopedia.com gives you the ability to cite reference entries and articles according to common styles from the Modern Language Association (MLA), The Chicago Manual of Style, and the American Psychological Association (APA).
Within the “Cite this article” tool, pick a style to see how all available information looks when formatted according to that style. Then, copy and paste the text into your bibliography or works cited list.
Because each style has its own formatting nuances that evolve over time and not all information is available for every reference entry or article, Encyclopedia.com cannot guarantee each citation it generates. Therefore, it’s best to use Encyclopedia.com citations as a starting point before checking the style against your school or publication’s requirements and the most-recent information available at these sites:
Modern Language Association
The Chicago Manual of Style
American Psychological Association
- Most online reference entries and articles do not have page numbers. Therefore, that information is unavailable for most Encyclopedia.com content. However, the date of retrieval is often important. Refer to each style’s convention regarding the best way to format page numbers and retrieval dates.
- In addition to the MLA, Chicago, and APA styles, your school, university, publication, or institution may have its own requirements for citations. Therefore, be sure to refer to those guidelines when editing your bibliography or works cited list.