The Campaign Spot

Election-driven news and views . . . by Jim Geraghty.

Will Any Candidate Seek To Restrict Credit Cards For Illegal Immigrants?


This seems like a 2008 issue waiting to happen:

Bank of America found itself at the center of the nation’s immigration controversy following a report on the front page of Tuesday’s Wall Street Journal that it’s offering credit cards to illegal immigrants in Los Angeles.
In the wake of the media firestorm, the nation’s second-largest bank told the Los Angeles Times today that it complies fully with all banking and antiterrorism laws governing customer identification, which permit the use of individual taxpayer identification numbers, or ITINs, issued by the Internal Revenue Service.

Critics say that it’s too easy for undocumented immigrants to receive ITINs.

“At face value the program seems to be problematic,” Russ Knocke, a spokesman for the Department of Homeland Security, told the Times. “It seems to be lending itself to possibilities of perpetrating identity theft or creating more risk for money laundering.”

One doesn’t need a U.S.-issued form of identification to get a Individual Taxpayer Identification Number. As the IRS states:

ITIN applicants are not required to apply in person, and IRS does not further validate the authenticity of identity documents. ITINs do not prove identity outside the tax system, and should not be offered or accepted as identification for non-tax purposes.

So let’s say I have some sort of documentation from a foreign government that says that I am “John Doe,” even though that’s not really my name. Maybe the documentation is fake, or maybe I’ve committed identity theft. I fill out the IRS form, send in a pay stub for John Doe (the name I gave my employer), and get my ITIN. I go to Bank of America, fill out forms with my temporary residence here in the U.S., open a checking account with the minimum balance and don’t bounce any checks for three months. If I do that, I get a credit card with a limit of $500; which I promptly blow and use. And then I go home to my home country, which I was going to do as a temporary migrant worker anyway. And the Bank of America and the IRS are looking for John Doe, who doesn’t exist, other than on a piece of paper issued by some foreign government.

I mean, really, did we just have a major national bank offer a line of credit to individuals with A) no U.S.-issued form of photo identification B) no permanent address and C) a desire to depart to a foreign country in the near future? Does anyone else see a problem here?

UPDATE: Hillary Spot reader Peter writes in with some good news:

I called Bank of America to politely voice my concern over their plans to offer credit cards to illegal immigrants. The customer service rep made it clear that I wasn’t the only customer who had been calling and emphasized that this was “a test” (i.e. something that BoA might shut down without losing face.) He seemed particularly interested in my concerns that existing, legal, BoA customers would be incur extra costs to cover the high fraud rate on this cards. In short, this may not be a done deal. Thanks for reporting on it and helping to keep the pressure on BoA.
ANOTHER UPDATE: A Hillary Spot reader with familiarity with banking offers additional thoughts. Michael writes:
I run a small community bank in a rural area. There is no law that prevents a citizen from another country from opening an account in or borrowing money from a U.S. bank. It happens all the time.  Sometimes the new customer resides overseas but does business here, sometimes he resides overseas but wants to put some money in a U.S. dollar account in a U.S. bank because of currency risk and or political risk. Sometimes he resides here.  As I think about it, what should the banker do?No one has told us that it’s our responsibility to determine if our customer has a valid visa or to make sure they haven’t overstayed the time limit on their last entry.
The issue isn’t that citizens of foreign countries bank in the U.S.; the issue is proof of identity, along with concerns about the reliability of credit extended to a person who may or may not have a permanent address, who is likely to leave the country, and when it is unknown if or when the person will return to the U.S.. I realize I’m just a layman, but it strikes me as a credit risk.Later, Michael adds,
The idea that my credit card costs are going to be affected by higher fraud costs associated with illegal alien cardholders is absurd.  If we truly believe in free markets and this occurs, low risk cardholders will gravitate to lower cost programs. Secondly, bank card programs are sophisticated enough that pricing is related to risk.  No successful program(and Bankamerica’s, formerly MBNA, is unquestionably, without exaggeration,  the most sophisticated in the world) would charge  a very low risk credit the same as a higher risk credit.
Good for Bank of America, but how many illegal immigrants does BoA expect to sign on? How many of them will take out a credit card under a fake name, run up a $500 bill, and skip town?I’m sure it won’t be enough to bankrupt Bank of America, but it will be a loss. Why should currently-existing low-risk Bank of America customers “gravitate” — i.e., switch — to another card or bank because BoA’s management has decided to gamble by reaching out to the illegal immigrant market? In a nation of 300 million people, is any bank really forced to target illegal immigrants as a desired demographic to extend credit to?

Tags: Barack Obama , Bill Richardson , Chris Dodd , Fred Thompson , Hillary Clinton , Horserace , Joe Biden , John Edwards , John McCain , Mike Huckabee , Mitt Romney , Newt Gingrich , Rudy Giuliani , Sarah Palin , Something Lighter , Tommy Thompson


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