Small-Time Crimes a Dealbreaker for Banking Jobs

Banks want changes to law preventing them from hiring employees with certain criminal records

By Lalita Clozel of The WSJ. Excerpt:

"Over the past decade about 1,200 people with criminal records have asked the government to let them work at a bank—with more than 40% of requests rejected or unresolved. The banking industry wants to change that.

Under a 1950 law, banks are barred from hiring anyone convicted of a crime of dishonesty or breach of trust. The only way around the law is to get a waiver from the Federal Deposit Insurance Corp. Since 2008 it has approved around 57% of requests made by individuals petitioning on their own or with bank sponsorship, according to agency data.

Banks say the restriction is too tight, keeping them from hiring a more diverse pool of candidates. The ban covers felonies such as financial fraud, but also misdemeanor offenses that result in no prison time, including minor shoplifting and drug-possession convictions. There is no broad statute of limitations, meaning offenses from early adulthood can stop a candidate decades later.

The law can “pose unnecessary and inappropriate obstacles to banks’ ability to employ qualified individuals with limited criminal records…who have taken steps to rehabilitate themselves,” the Bank Policy Institute, a bank trade group, said in an April letter to Congress asking lawmakers to revisit the statute. There are no ongoing legislative efforts to change it.

Criminal convictions have kept otherwise qualified applicants from getting a range of bank jobs, from tellers to customer-service representatives to director positions."

"Due to the law, banks must conduct background checks on all new hires. Those checks include running fingerprints or other personal information through databases compiled by such agencies as the FBI. One large bank, asking not to be named, said roughly 10% of its applicants hit red flags through that process, though not all end up being disqualified by the FDIC rules.

Banks and advocates for criminal-justice changes have encouraged the FDIC to exempt more people from the ban by creating a statute of limitations and an exemption for drug crimes.

“The offenses are very broad,”  said Maurice Emsellem, program director at the National Employment Law Project. “Unnecessarily so.”"