American Banks: Parochial Thinking in a Global Economy

But do U.S. banks even know the rest of the world exists? 

The evidence of the global economy is all around us. All of our electronics are made abroad, as is nearly every stitch of clothing we wear. You name it– knickknacks, mowers, appliances, kayaks, bicycles–and chances are good it’s not labeled “Made in the USA.” We eat sea bass from Chile, olive oil from Italy, cheese from Switzerland, and egg rolls from China, then wash it down with beer from Mexico and coffee from Vietnam. If it makes you sick, your stomach x-ray will be read in India. Looking for a car with the most American-made parts? Try a Toyota Camry! Go to work and your boss tells you that you have to work harder in order to be more competitive in the global market.

Yep. It’s a global marketplace out there, which makes you wonder why American banks seem not to have gotten the memo. Two recent examples: Try to buy some Euros, Yuan, or British pounds at your local bank. If you live in a major city such as New York or Chicago you can probably find one, but all the banks here in Western Massachusetts told me the same thing: they would need to “order” foreign money. That little “service” costs far more than using my ATM card and withdrawing it in the countries I visited.

Okay, a minor thing perhaps. But try this one. I am the organizer for a yearly academic conference. We don’t accept credit cards or other rip-off services (like PayPal, the TicketMaster of credit transfers) because their fees are too high. (I’ll be damned if I’ll pay banks more than my annual stipend for the “convenience” of allowing others to deposit money into their accounts.) We operate on a cash, check, or money order basis. Until recently, that is. Now I have to tell those who don’t live in the United States that their checks and money orders must be issued by a U.S. bank. I recently had to return a money order to a young man in Canada because–and you can’t make this up–Canadian routing numbers only have eight digits and U.S. banks require nine!

Wait a minute! Have banks never heard of NAFTA? This is Canada, for heaven’s sake, as in our number one trading partner. As in that place north of us with the world’s longest unprotected border. As in an economy that’s outperforming our own. Exchange is a rather basic economic concept and these experiences made me wonder how American banks expects to compete in the global marketplace if they can’t even handle a money order. A personal check I can understand. It would cost the bank something (substantially less than they charge) to process a bad check, but a money order is cash under a different name. It’s akin to old-style travelers’ checks in that they’ve already been purchased, so there’s no fear that the money isn’t there. And we’re also talking an electronic transfer of funds. How hard is it to enter an eight-digit routing code into a computer? I went on line and found dozens of software packages available for any bank (apparently all in the U.S as the sites are all in English) dealing in foreign currency, transfers, and–ahem!-–money orders.

And really, shouldn’t all banks be dealing in foreign exchange in an economy in which goods, services, and workers move across borders? It made me think. Maybe the U.S. is so concerned about Mexican migrant laborers because they are stamped with the wrong routing code.